Business Law Semester 2: Duress

Questions and Answers

What defines duress in a legal context?

Pressure applied with clear contractual rights

Legitimate pressure used to gain consent

Illegitimate pressure or threats to obtain consent (correct)

No pressure applied during contract formation

In the case of Barton v Armstrong, what was one key factor that justified B's reaction to A's threats?

B believed there was no risk to his safety

A made no threats

B took A's threats seriously and had justification (correct)

B had compelling business reasons to agree

What was the outcome of the Barton v Armstrong case regarding the contract?

The contract was upheld without changes

The contract was modified to increase payment

The contract was affirmed by B's actions

The contract was set aside due to duress (correct)

What type of duress was demonstrated in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd?

Threat of economic harm Signup and view all the answers

In terms of duress, what must a victim do to have a contract set aside in a reasonable timeframe?

Act reasonably soon after the influence subsides Signup and view all the answers

What was the primary reason why H threatened to increase the price in North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd?

A devaluation in the currency made it unprofitable Signup and view all the answers

Which factor does NOT contribute to establishing actionable duress?

Presence of compelling business reasons Signup and view all the answers

Which is a necessary condition for a victim of duress to affirm a contract?

Prompt communication that the contract is treated as void Signup and view all the answers

Study Notes

Duress Overview

Duress involves the use or threat of illegitimate pressure to gain consent from another party.
Forms of duress include:
- Physical harm, as demonstrated in Barton v Armstrong.
- Economic harm, illustrated by North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd.
- Threats related to goods, including refusing their return or destruction.

Setting Aside Contracts

Contracts influenced by recognized forms of duress can be annulled.
Victims of duress must act promptly to set aside the contract; delay after the influence subsides may be interpreted as contract affirmation.

Duress to Person: Barton v Armstrong

Claim: B alleged coercion from A to enter a contract for company purchase, based on threats to B's life and family safety.
Trial Judge's Findings:
- A made the alleged threats.
- B took them seriously, with justification.
- Compelling business reasons influenced B's decision to proceed with the sale.
Core Issue: Whether the sale contract could be voided due to duress.

Decision and Reasoning of Barton v Armstrong

Outcome: The contract was voided.
Duress was actionable, as A's threats constituted illegal pressure.
Despite compelling business reasons, duress played a significant role in B's decision, thus allowing for contract annulment.
B communicated intent to nullify the contract in a timely manner.

Duress: Threat of Economic Harm - North Ocean Shipping v Hyundai Construction

Background: H was contracted to build a tanker for NOS at a predetermined price in USD.
Issue: Following a 10% devaluation of the USD, H deemed the project unprofitable and demanded a 10% price increase, lacking any contractual basis for such demand.
Implication: Threats of economic hardship can constitute duress, undermining contractual obligation.

Description

Explore the concept of duress in business law with a focus on how illegitimate pressure can impact consent between parties. This quiz examines key cases and examples related to duress, including physical and economic harm. Perfect for students of Principles of Business Law!