Economic Duress in UK Law

However, since the decisions of Kerr J. in Occidental Worldwide Investment Corporation v. Skibs, A/S Avanti (The Siboen and the Sibotre) [1976] 1 Lloyd's Rep. 293, of Mocatta J. in North Ocean Shipping Co. Ltd. v. Hyundai Construction Co. Ltd. [1979] Q.B. 705, and of the Judicial Committee of the Privy Council in Pao On v. Lau Yiu Long [1980] A.C. 614, that limitation has been discarded; and it is now accepted that economic pressure may be sufficient to amount to duress for this purpose, provided at least that the economic pressure may be characterised as illegitimate and has constituted a significant cause inducing the plaintiff to enter into the relevant contract (see Barton v. Armstrong [1976] A.C. 104 at p. 121 per Lord Wilberforce and Lord Simon of Glaisdale (referred to with approval in Pao On v. Lau Yiu Long [1980] A.C 614, 635, per Lord Scarman); and Crescendo Management Pty. Ltd. v. Westpac Banking Corporation (1988) 19 N.S.W.L.R. 40, 46, per McHugh J.A.).

It follows therefore that, prima facie at least, whether or not economic pressure amounts to duress sufficient to justify avoidance of the relevant contract by the innocent party is a matter for the proper law of the contract, wherever that pressure has been exerted. Moreover in the present case there was at the relevant time no applicable statutory provision of English law which required that blacking or the threat of blacking should not be regarded as duress.

In my judgment a similar approach should be adopted for the purpose of determining in the field of industrial relations whether economic pressure applied abroad is or is not legitimate.In my judgment a similar approach should be adopted for the purpose of determining in the field of industrial relations whether economic pressure applied abroad is or is not legitimate.

The rationale is that his apparent consent was induced by pressure exercised upon him by that other party which the law does not regard as legitimate, with the consequence that the consent is treated in law as revocable unless approbated either expressly or by implication after the illegitimate pressure has ceased to operate on his mind.

Commercial pressure, in some degree, exists wherever one party to a commercial transaction is in a stronger bargaining position than the other party.

The equitable doctrines of unconscionable transactions (or undue pressure, as it is called in some jurisdictions such as Australia) and undue influence are particularly relevant in the context of economic duress. Both involve the possibility of the court setting aside a contract made in circumstances which may involve pressure being put on a party to enter into the contract. There is no lack of clarity in the criteria that must be satisfied for their application.

I would therefore hold that money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by the citizen as of right.