By Rajshree Lohia, Christ Law University, Bangalore
“Editor’s Note: Free Consent is one of the most important essentials of a valid contract. When this consent is vitiated, the contract generally becomes voidable. Consent can be vitiated through duress. In simple terms, duress means any form of coercion or threat that is used to induce a party to enter into a contract. Initially, duress was only confined to actual or threatened violence. Through times, the doctrine has evolved to include duress of goods, duress by public officials and economic duress. Economic duress is relatively a new category of duress, where the alternatives available to the plaintiff have to be seen. This form of duress, is however difficult to prove.”
Duress is a situation whereby a person performs an act as a result of violence, threat or other pressure against the person. According to the Black’s Law Dictionary, duress may be “any unlawful threat or coercion used… to induce another to act [or not act] in a manner [they] otherwise would not [or would]”.
Duress is the weapon with which the common law protects the victim of improper pressure. The court intervenes where a party enters into a contract as a result of pressure which the law regards as unacceptable. There is a thin between acceptable and unacceptable pressure, which has been shifting over time. The boundaries of what is considered unacceptable pressure have been pushed outwards to encompass many more forms of pressure, including economic pressure. In the case of economic duress, some judges are already adopting a restrictive approach, which makes it more difficult for relief to be available on this ground.
The conceptual framework for allowing a duress defense generally stems from the laudable notion that one should not be forced into contracting with another, but should come to the bargain voluntarily. Volition is the touchstone of the freedom to contract. At common law, when an agreement is the product of coercion and not entered into voluntarily, it was considered void ab initio.
The nature of the coercion that would support a defense was limited historically to threatened or actual imprisonment or fear of loss of life and limb. As the law developed in the early part of the last century, the threats that could qualify under the duress doctrine broadened in scope to include threats to detain goods. In addition, courts began to find that threatened breaches of contract resulting in irreparable harm constituted duress.
Evolution of Doctrine of Duress
At common law duress was first confined to actual or threatened violence to the person. For the next seven centuries the common law required a “wrongful” or an “unlawful” act before it could provide redress for duress, but the presence of fear in the victim would be relatively less important.
Common law duress of the person was often assimilated to crime or tort; indeed these categories often overlapped, and for that reason perhaps it failed to develop much beyond the narrow scope of threatened personal violence. Victims of more subtle forms of pressure had to seek equitable redress in Chancery which acted generally to protect mentally and physically handicapped persons who had been impoverished by the exercise of undue influence. Equity was concerned with promises which had been extracted by the unethical or immoral use of a superior bargaining position, such as was found in confidential or fiduciary relationships, which inhibited the victim’s free exercise of his will. The inequity in the equitable doctrine of “pressure” was that the victim had been compelled to do what he did not want to do.
Historically, there was one exception to the common law rule that duress would create a voidable contract when it was induced by threatened personal violence, that is, duress of goods. This single, early incursion into the area of economic duress began in the eighteenth century in simple cases of wrongful seizure or detention of personal property. There were no parallel developments in England. Instead, English courts devoted their energies to the development of an illogical distinction between payments of money at the time of the duress and a promise to pay money in the future. In the former case the victim was given restitution of his money, whereas in the latter case he was ordered to pay the money to his coercer.
In summary, common law distress was a crude, ill-defined and obscure notion, little used and of little use except in cases of overt threats. Equally, while invoked by the courts more often, undue influence or pressure have lacked sufficient definition to be effective controls when economic coercion in the marketplace was at issue.
Elements of Duress
It is a fact that people enter into contracts on a daily basis as a result of pressure of one kind or another. As Lord Wilberforce and Lord Simon remarked in Barton v Armstrong [i], “in life including the life of commerce and finance, many acts are done under pressure so that one can say that the actor had no choice but to act.” Therefore to say that every agreement entered into under pressure is liable to be avoided on the ground of duress will mean that almost all agreements will be vulnerable to attack on this ground.
The law has to determine the pressure which is unacceptable and so amount to duress and pressure which is acceptable and therefore should not constitute duress. This has been done by laying done two requirements which must be satisfied for relief to be available on the grounds of duress. There must be pressure which amounts to compulsion of will of the complainant and the pressure must be one that the law does not regard as legitimate. As Lord Scarman explained in Universe Tankships Inc of Monrovia v. ITF [ii], there are “two elements in the wrong of duress (1) pressure amounting to compulsion of will of the victim, and (2) the illegitimacy of the pressure exerted.”
The first element concerns the coercive effect of pressure on the complainant. It inquires whether the complainant’s consent was truly given. However, the complainant’s defective consent alone is not sufficient to constitute duress. The second element is necessary. The pressure that impairs the complainant’s free exercise of judgment must be illegitimate. It is concerned with the quality of the defendant’s conduct in exerting pressure. The defendant must have behaved in a way which makes the pressure affecting the complainant’s consent to be regarded as illegitimate.
Forms of Duress
Originally, the parameters of the doctrine were very narrow in that an agreement could be avoided for duress only where the duress was in the form of a threat to the person. Subsequently, it was accepted that duress of goods can also vitiate consent to an agreement, and recent developments in respect of economic duress show that the categories of duress should not be regarded as closed.
Duress of Person
Duress of the person may consist in violence to the person, or threats of violence, or in imprisonment, whether actual or threatened. The threat of violence need not be directed at the claimant: a threat of violence against the claimant’s spouse or near relations and a threat against the claimant’s employees has been held to constitute duress. It is suggested that even a threat against a stranger should be enough if the complainant genuinely that the submission was the only way to prevent the stranger from being injures or worse.
The complainant only needs to prove that the pressure was the reason why he entered into the contract and the court will conclude that illegitimate pressure induced the contract unless there is evidence that the illegitimate pressure in face contributed nothing to the decision to enter the contract. It is not necessary for the claimant in case of threat to person to demonstrate that he had no practical alternative but to enter into the challenged contract.
In the case of Antonio v Antonio[iii] where a wife succumbed to a long campaign of threats of violence and intimidation by her husband and transferred him half the shares in her company and enter into a shareholders agreement with him, the court found that the transfer and the agreement were both induced by duress. The court did not even enquire into whether she had any practical alternative such as seeking legal remedy.
Duress colore officii
In cases where the illegitimate pressure is in the form of an unlawful demand for payment by a public official, a distinction is to be drawn between cases where the complainant paid the money in order to obtain a service from the public official (such as granting of a license or permit) and cases where the complainant paid the money by way of tax or similar impost. In the first category, the court readily infers that the claimant had no practical alternative but to submit to the demand of the public official since, as Littledale J. put in the Morgan v. Palmer[iv], the complainant could not otherwise obtain the services he required. But in cases where the payment is by way of tax, there is a practical alternative open to the claimant in the form of legal proceedings to challenge the legality of the public official’s demand for tax.
Duress of goods
A threat to destroy or damage property may amount to duress. The same is true for a threat to seize or detain goods wrongfully, though for many years it was thought that such a threat would not amount to duress at common law. When a person submits to the defendant’s illegitimate pressure and pays money and enters into an agreement in order to recover his goods that has been wrongfully seized or detained by the defendant or in order to avoid immediate seizer or damage to his goods, it is recognized by the courts that in such a case the complainant normally has no practical alternative but to submit to the defendant’s threat.
In the case of Astley v. Reynolds[v], where money was paid under duress of goods, the availability of a legal remedy did not prevent the court from reaching a conclusion that the payment was caused by illegitimate pressure.
In Maskell v. Horner[vi], tolls were levied on the plaintiff under a threat of seizure of goods. The tolls were in fact unlawfully demanded. Their payment was held to be recoverable as it had been made to avoid seizure of the goods and the plaintiff was entitled to recover the payments he had made under the illegal demand.
Certain threats or forms of pressure, not associated to the person, nor limited to the seizure or withholding of goods, may give grounds for relief to a party who enters into a contract as a result of threat or pressure. In cases of economic duress the main question is whether the claimant had practical or adequate alternative or not. The alternative must be practical or reasonable in the sense that it was adequate for the claimant’s purpose in the circumstances. In the case of a threat to breach a contract, for example if the circumstances are such that the claimant can easily obtain the required goods or services from an alternative source at a reasonable prize then the court is likely to regard this as a reasonable alternative and therefore may regard this as a strong evidence that the claimant’s decision to enter into the agreement was not induced by illegitimate pressure; but it is different where the circumstances are such that it would be difficult or impossible to find the substitute for the contracted goods or services within the time available at a reasonable cost.
In North Ocean Shipping Company Limited v. Hyundai Construction Co. Ltd.[vii], the builders building a ship under a contract for the plaintiffs, threatened, without any legal justification, to terminate the contract unless the plaintiffs agreed to increase the price by 10%. It was held that this amounted to a case of economic duress and that the plaintiff would be entitled, on that ground, to refuse payment of the additional 10%.
In B. & S. Contracts and Design Ltd. V. Victor Green Publications Ltd.[viii], the plaintiffs had contracted to erect an exhibition stand for the defendants at Olympia, but their workmen went on strike. To get the work done, the defendants agreed to contribute £4500 to pay off the workmen’s claims. It was held by the court of appeal that this promise was made under duress as the defendants had no realistic alternative but the promise to pay, given the serious threat to their economic interests.
Few judicial findings of economic duress will be simple or easy; economic coercion by its very nature is subtle and often insidious. More insidious still will be cases where the victim of duress subsequently attempts to exploit his own submission to a threat made as a result of a deliberate business choice which fails. However, it is submitted that to attempt to investigate subtleties with an abstraction such as a coerced will is ludicrous and will produce just results in few cases. Nor will it provide practical guidelines on the basis of which contracting parties can regulate themselves: not all threats are wrongful and some are perfectly valid forms of commercial pressure.
Given the difficulties in satisfying these requirements, it is not surprising that the economic duress doctrine is often alleged but seldom allowed in U.S. litigation. Courts will not bail out parties who have placed themselves in sticky predicaments that forced them to agree to onerous terms to overcome self-inflicted wounds. Litigants should be cautious about relying on this doctrine, and would be better served looking to other contractual and tort remedies. The economic duress doctrine remains a doubtful alternative for rescinding a contract.
Edited by Kudrat Agrawal
[i]Barton v. Armstrong  A.C. 104.
[ii]Universe Tankships Inc of Monrovia v. ITF  1 A.C. 366.
[iii] Antonio v. Antonio  EWHC 1199 (QB).
[iv] Morgan v. Palmer (1824) 2 B. & C. 729 at 739.
[v] Astley v. Reynolds (1731) 2 Str. 915 at 916.
[vi]Maskell v. Horner (1915) 3 K.B. 106.
[vii]North Ocean Shipping Company Limited v. Hyundai Construction Co. Ltd. (1979) QB 705.
[viii]B. & S. Contracts and Design Ltd. v. Victor Green Publications Ltd. (1984) I.C.R. 419.