Duress in English Law - Contract Law

Contract Law

Duress involves illegitimate threats. The common law long allowed a claim if duress was of a physical nature. So long as a threat is just one of the reasons a person enters an agreement, even if not the main reason, the agreement may be avoided. In Barton v Armstrong Mr Armstrong tried to "strong-arm" Mr Barton into paying him a large golden parachute to exit a business by getting his goons to make death threats to Barton's family. Even though Barton was tough, and would have probably done the payout regardless, he could avoid the agreement.

Only late in the 20th century was escape allowed if the threat involved illegitimate economic harm. A threat is always "illegitimate" if it is to do an unlawful act, such as breaking a contract knowing non-payment may push someone out of business. However, threatening to do a lawful act will usually not be illegitimate. In Pao On v Lau Yiu Long the Pao family threatened to not complete a share swap deal aimed at purchasing their company's building unless the Lau family agreed to change a guarantee agreement assuring the Paos would receive the rise in the swapped shares' prices when repurchased. The Privy Council advised that the Laus signing the guarantee agreement after the threat of non-completion of the main agreement was only a result of "commercial pressure", not economic duress. Just by observing the Laus' behaviour, and consideration of the situation before signing, there was no coercion amounting to a vitiation of consent. However, contrasting to cases involving business parties, the threat to do a lawful act will probably be duress if used against a vulnerable person.

An obvious case involving "lawful act duress" is blackmail. The blackmailer has to justify, not doing the lawful act they threaten, but against a person highly vulnerable to them, the demand of money.