Williams v Bayley (1866)

Facts: A son forged his father’s signature on promissory notes amounting to 7000 pounds and cashed them at the bank. The bankers insisted the father guaranteed the repayment of his sons debt. There was an implied threat that if the father didn’t execute the guarantee the son would be prosecuted and sent to Australia. The deed was executed. The son later absconded and the bankers sought to recover the 7000 pounds. The father sought a declaration that the agreement was void.

Held: that the agreement was invalid. A father appealed to, under such circumstances, to take upon himself a civil liability, with the knowledge that, unless he does so, his son will be exposed to a criminal prosecution, with a moral certainty of a conviction, even though that is not put forward by any party as the motive for the agreement, is not a free and voluntary agent, and the agreement he makes under such circumstances is not enforceable in equity.

Mutual Finance v John Wetton and Sons (1937)

Facts: Percy Wetton signed a guarantee in favour of the pf company on behalf of the df company in order to avoid the pf company’s threat to prosecute Ps brother Joseph Wetton for forgery. Percy was concerned that the prosecution of Joseph would kill their father. The pf company was aware of the father’s condition and this was one reason they approached Percy.

Held: the guarantee was obtained by undue influence, and the guarantors were entitled to repudiate it.

• “Where the instrument of coercion is the doing or threatening of a wilfully illegal act…a contract so procured will in general be held invalid. Even though the instrument of coercion is not it itself illegal, as in the threat of prosecution, the enforcement of a contract so procured may nevertheless be held to be contrary to public policy.”
• “UI may exist where a promise was extracted to prosecute a third party unless the promise was given. It is not necessary that there should be any direct threat.”
• “The doctrine of illegitimate pressure extends to any case where the persons entering into a contract were in substance influenced by the desire to prevent the prosecution of the person implicated, and were known and intended to be so influenced by the person in whose favour the undertaking was given.”

Crescendo Management v Westpac (1988)

Pf must show that he/she was subjected to:

-       Pressure; which was

-       Illegitimate

The onus then falls on the df to show that the illegitimate pressure did not contribute to the pf entering into the contract.

Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct.

It is not necessary for the victim to prove that illegitimate pressure was the reason for him entering into a contract: it is sufficient that it was one of the reasons.

“A person who is the subject of duress usually knows only too well what he is doing. But he chooses to submit to the demand or pressure rather than take an alternative course of action. The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate?” (Per McHugh JA)

Williams v Roffey Brothers and Nicholls (1991)

Facts: The pf entered into a subcontract with the df’s, who held the main building contract, to carry out carpentry work in a block of 27 flats for an agreed price of 20,000 pounds. The price was too low for the pf to operate at a profit and the df’s later orally agreed to pay the pf and additional 10,000 pounds. The df’s failed to make this payment, and the pf sued them for the amount. The judge held that the agreement was enforceable.

R v R (2003)

Ask: is there a necessary, reasonable and proportionate connection between the threat and the demand? E.g., “pay me the $100000 you owe me or I will show your spouse these compromising photos.”

Astley v Reynolds (1731)

Facts: the pf pawned family silver plate to a pawn broker as a security loan of 20 pounds. The broker demanded 10 pounds interest. The pf paid the money to get the plate back and then sued the broker for the 10 pounds. Court decided in favour of pf.

Barton v Armstrong (1976)

Facts: Barton was facing financial ruin unless he entered into a particular contract. To ensure Barton did enter into the contract the other party threatened to kill him unless he did so. Barton admitted he might well have entered the contract even if no threat had been made.

Held: duress established where duress one reason for entry into transaction. Onus of proof on respondent to establish that threats made contributed nothing to decision of appellant to enter into transaction. TJ found that threats did contribute to pf’s decision to enter into the contract.

The Siboen and the Sibotre (1976)

Facts: the charterers of two ships renegotiated the rates of hire after a threat by them that they would go bankrupt and cease to trade if payments under the contract of hire were not lowered. Since they also represented that they had no substantial assets, this would have left the owners with no effective legal remedy. The owners would have had to lay up the vessels and would then have been unable to meet mortgages and charges - a fact known by the charterers. The threats themselves were false in that there was no question of the charterers being bankrupted by high rates of hire.

Held: Kerr J rejected the earlier confines of duress. But, he said, in a contractual situation commercial pressure is not enough to prove economic duress. The court must, he said, be satisfied that the consent of the other party was overborne by compulsion so as to deprive him of his free consent and agreement. This would depend on the facts in each case. He considered that two questions had to be asked before the test could be satisfied: (1) did the victim protest at the time of the demand and (2) did the victim regard the transaction as closed or did he intend to repudiate the new agreement? Kerr J considered that the owners would have been entitled to set aside the renegotiated rates on the ground of economic duress, but that on the present facts their will and consent had not been 'overborne' by what was ordinary commercial pressures.

The Universal Sentinel (1983)

Facts: The ITWF blacked a ship, The Universe Sentinel, to prevent it from leaving port. They made several demands in relation to pay and conditions and also demanded the ship owners pay a large sum of money to the Seafarers International Welfare Fund. The ship owners agreed in order that the ship could leave port and then sought to recover the sum paid to the welfare fund.

Held: The money had been extracted under economic duress and could be recovered. The House of Lords held that earlier case law had been wrong to look at coercion of the will so as to vitiate consent. During an analogy with the defence in criminal law where it is recognised that a defendant acting under duress has the intention to commit the offence but is excused from the crime because they had no choice but to submit.

Accordingly two elements of duress were identified:

1. Compulsion of the will - absence of choice
2. Illegitimacy of the pressure