Since contracts can be binding if the parties voluntarily consent to it, it is obvious that where one party is forced to consent by threats or undue persuasion by the other, that consent should be invalid. The law has developed two doctrines to deal with this issue: the common law of duress, and the equitable one of undue influence. We however focus on the common law of duress which renders a contract voidable.

Traditionally, the common law doctrine of duress would only make a contract voidable where on party had obtained the other’s consent by means of physical violence or threats of it, or unlawful constraint. Over the years, the courts have extended the scope of the doctrine to include economic duress.

Economic duress occurs where one party was forced into the contract due to economic pressure. Economic pressure must go a long way further than the ordinary pressure of the market, and most of the cases on the subjects have been attempts to define just how much further.

Economic duress first arose in North Ocean Shipping Co v Hyundai Construction Co (The Atlantic Baron) (1979) and was further confirmed in the case of Pao On v Lau Yiu Long (1979) in which Lord Scarman explained that a threat to break a contract was not in itself enough to constitute duress: ‘it must be shown that the payment made or the contract entered into was not a voluntary act’.

Economic duress will be present where there is compulsion of the will to the extent that the party under threat has no practical alternative but to comply, and the pressure used is regarded by the law as illegitimate.

Duress need not be the sole inducement

Duress must not be one of the reasons for entering (or modifying) a contract, but it does not have to be the only or even the main reason. This was the position held by the Privy Council in the case of Barton v Armstrong (1975).

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