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How well did you answer the questions? Score your responses against the answer guidance here.
In brackets is the number of marks each answer is worth. There is a maximum of 8 points available.
1. What is the effect of duress on a contract? (1)
Answer guidance:
Duress renders the contract voidable i.e. liable to be set aside by the party affected (remedy of rescission applies subject to the bars). (1)
2. What must be shown to establish a claim based on economic duress? (4)
Answer guidance:
(a) Pressure or threat affecting business or financial interests. (1) (Need to show the causal link between the pressure and the contract: Huyton v Peter Cremer.)
(b) That threat/pressure must amount to a coercion of the will i.e. no realistic choice but to agree because very serious consequences if do not do so. (1)
(c) Pressure or threat must be illegitimate. (1)
(d) Victim must protest at the time or shortly thereafter. (1)
3. What is the significance of the decision in CTN Cash & Carry Ltd v Gallaher Ltd? (3)
Answer guidance:
It addressed the question whether so-called lawful act duress can amount to illegitimate pressure. (1)
Clearly, it may be illegitimate if there is a threat to take lawful action but the advantage, which it is sought to obtain, is illegitimate (per Lord Scarman in The Universe Sentinel). In the absence of some sort of illegitimate purpose in making the lawful threat, it is now clear that in the context of arm’s length dealings between two commercial enterprises, it is unlikely that a threat of lawful action will amount to duress (1) (particularly where the party making the threat believes its demand is lawful) (CTN Cash & Carry). This would introduce too much uncertainty into commercial transactions. (1)
Of course, this leaves open the question whether a threat of lawful action against a consumer by a large commercial entity could be illegitimate pressure in some circumstances (e.g. an unconscionable threat of lawful action).
Points scored [maximum of 8] =