Duress is an element of force either physical or economic, which is used to override on parties freedom to choose to enter into a contract. Under such circumstances the contract is voidable at the instance of the innocent party. Its application used to be restricted to contracts entered into as a consequence of a threat. Originally it was held that the threats to person’s goods could not amount to duress, but a doctrine of economic duress has now been developed by the courts.
The effect of the doctrine stated that an abuse of economic power can render a contract invalid, following lord denning’s decision in D&C builders V Rees and was developed in later cases such as the sibeon and sibotre and the Atlantic Baron. In this case the plaintiffs took delivery of the ships in name and 8 months later they sought to recover on the basis in inter alia, economic duress. It was held the plaintiffs action failed as the delay in seeking recovery amounted to affirmation of the contract and therefore lost the right to rescission.
There is a difficulty in distinguishing ordinary commercial pressure stated by kerr J which is inadequate to set up a defence from economic duress , LJ Scarman stated recognising economic duress as a factor which may render a contract voidable provided always that a basis of such recognition is that it must amount to a coercion of will which vitiates consent. In CTN cash and carry v Gallaher ltd where the court of Appeal confirmed that a lawful act with a demand for payment may amount to economic duress as in the given scenario.
In order to benefit from the doctrine of duress claimants must show that the payments made on the contract entered into was not a voluntary act. The test devised seeks if the victim protested at the time of the contract. It also must be shown that there was no alternative course of action. Also included in the test is of they intended to repudiate the contract. Finally that the pressure was considered to be illegitimate by the courts which would mean that Marco would be able to seek damages for any lost assets.
As a result of the given facts we can deduce that Marco can benefit from a plea of economic duress as he did protest the amount payable as it states in the scenario he was ‘reluctant’. Fighting Fit Fitters (FFF) said they would not be able to complete the project in time inless the extra ? 3000 was paid and as he had already secured a local artist to carry out the official opening ceremony there was an urgency to get the fitters to complete the job.
Under each circumstance the court will permit rescission of an agreement as can be seen in Atlas Express v Kafco. The defendant company had secured a highly profitable contract with Woolworths and employed the plaintiffs as their carriers. Prior to entering the contract Atlas estimated the price of the loads of cartons in one carrier, the first load fell below the estimate so the plaintiff sought to increase their price. As K were unable to find another carrier and relied economically on the contract kafco felt they had no option but to agree to the demand.
When atlas sued to recover the increased charges they failed as it was held that the attempt to increase the charge was a clear case of economic duress. It can be deduced that Marco would have to pay the ? 53000 that was agreed upon when he phoned FFF for the second time as they competed it ontime, he would only have to pay then ? 53,000 as marco stated on the phone he would only pay that much to which they began work thus they contracted on his terms.
There was no alternative as he inquired but GG stated they could not complete until mid july which would be too late. In relation to the amount that gorgeous gyms ltd (GG) are claiming that they ought to be paid but it can be argued that there should be no payment as when they were phoned they stated that they had no record of any work being ordered therefore he is not liable to pay them what they are claiming and no work had commenced on their part.