Economic duress: the requirement of no reasonable alternative (PIA v Times Travel)
Corbett Bakeries Ltd has a fixed-price contract with Glenmoor Mills Ltd for weekly deliveries of flour to its bakery in England. Midway through the term, Glenmoor tells Corbett it will stop delivering unless Corbett agrees a 15% price rise. Glenmoor has no right under the contract to do this. Corbett's buyer knows that two other mills in the area could supply the same flour at the original price from the next day, but finds it simpler to sign Glenmoor's revised price schedule. Corbett now wants to set the price variation aside for economic duress.
Which of the following best describes whether Corbett is likely to succeed?
Choose one answer to see the reasoning.
Worked answer
Correct answer B: Corbett is unlikely to succeed, because even if the threat was illegitimate and caused it to agree, Corbett had a reasonable alternative.
THE RULE TO REMEMBER
Economic duress requires an illegitimate threat or pressure that caused the claimant to contract, and that the claimant had no reasonable alternative to giving in; the contract is then voidable.
Economic duress: the requirement of no reasonable alternative (PIA v Times Travel)
In Pakistan International Airline Corp v Times Travel (UK) Ltd the Supreme Court restated the elements of duress. A claimant seeking rescission must show an illegitimate threat or pressure, and that it caused the claimant to enter the contract. Lord Burrows, whose statement of these elements the majority expressly endorsed, added that for economic duress there is a third element: the claimant must have had no reasonable alternative to giving in to the threat or pressure. A threat to break an existing contract unless paid more may well be illegitimate, and it may have caused Corbett to sign. But Corbett's buyer knew two other mills could supply the same flour at the original price from the next day, and chose to sign only because it was simpler. Corbett had a reasonable alternative, so its claim that the variation should be set aside for economic duress is unlikely to succeed.
Why A is wrong: Illegitimate pressure is only one element; causation and, for economic duress, the absence of a reasonable alternative must also be shown.
Why C is wrong: Lack of consideration and duress are separate doctrines, and duress makes a contract voidable rather than void.
Why D is wrong: Economic duress is not confined to threats of crimes or torts; a threatened breach of contract can be illegitimate, and the Supreme Court recognised lawful act duress.
Why E is wrong: Ordinary commercial pressure is not enough; the pressure must be illegitimate, and the other elements must be met.
A little more practice done.
Related questions
Undue influence and a joint loan to spouses: when the lender is put on inquiry (CIBC v Pitt)
Which of the following best describes the position between Aisha and the bank?
Damages for negligent misrepresentation and the reverse burden of proof (Misrepresentation Act 1967 s.2(1))
Which of the following best describes Tom's position if he claims damages under the Misrepresentation Act 1967?
Excluding liability for negligence in a business contract (Unfair Contract Terms Act 1977 s.2)
Which of the following best describes the effect of clause 9 under the Unfair Contract Terms Act 1977?
A GOOD HABIT, DELIVERED
Tomorrow's question.
In your inbox.
One free question a day, with the answer and reasoning.
No course pitches. Just your daily practice.