Three Forms of Duress Can Be Identified

Duress If a contract is entered into by one party as a result of unlawful threat or pressure, the party will have entered the contract under duress or coercion and the contract will be voidable.

Three forms of duress can be identified: 1. duress of the person; 2. duress of goods; and 3. duress of a person’s economic well being.

Duress of the person A party who enters a contract because of actual or threatened violence to his or her person or to his or her immediate family or near relatives will have entered under duress: Seear v Cohen.

It is not essential that duress be the sole or even predominant cause of the decision to enter the contract, it is sufficient if the threat operated to ‘interfere’ with the threatened party’s free will to enter the contract and contributed to the decision to do so: Barton v Armstrong. Therefore, duress can operate to render a contract voidable even if the threatened party was going to enter into the contract in any event: Barton v Armstrong.

Duress of goods A party who enters a contract because of threats made to seize, detain, damage or destruct unlawfully that party’s real or personal property will have entered under duress.

The question to be asked is whether, taking into account the threat of goods, the contract was concluded voluntarily: Hawker Pacific v Helicopter Charter. In Hawker Pacific the defendant, who had retained a Helicopter of the plaintiff until they singed a waiver of liability for work performed, knew that the plaintiff was in urgent need of obtaining possession of the helicopter and its demand, under the circumstances, left the plaintiff with no other reasonable alternative but to submit enter the contract.

Economic Duress A party who enters a contract because of illegitimate economic pressure - threats made to commit some unlawful act which causes, or threatens to cause, economic harm - will have entered under duress.

To establish duress, the party must show treats to their economic interest, that is:  pressure was applied to induce the victim to enter into the contract; and  that pressure went beyond what the law would countenance as legitimate.

Per McHugh J in Crescendo Management v Westpac Banking Corp.

Pressure It is not necessary for the pressure to ‘overbear the will’ of the party enter into the contract, rather, ‘any pressure which induces the victim to enter the contract’ is sufficient: Crescendo Management v Westpac Banking Corporation.

The illegitimacy of the pressure Pressure may be illegitimate if it amounts to unlawful treats or unconscionable conduct. However, these categories are not closed.

A threat to breach an existing agreement is a form of illegitimate pressure through an unlawful act eg North Ocean Shipping v Hyundai Construction Co where the defendant threatened to carry out an unlawful act of breaching the contract unless the plaintiff agreed to increase the price paid for services.

In the context of duress, unconscionable conduct could occur where one of the parties to the contract knew of the others legal, economic or financial vulnerability and yet sought to exploit that vulnerability in inducing a contract very much to its advantage.

Remedies At common law, the victim may seek restitution or rescission. Duress under statute The Trade Practices Act and Fair Trading Act prohibit certain forms of duress.

Section 60 of TPA and s50 of FTA prohibit the use of physical force or undue harassment or coercion in connection with the supply or possibly supply of goods or services to a consumer or the payment for goods or services by a consumer.

Section 53A(2) of TPA and section 50 FTA prohibit physical force or undue harassment or coercion in connection with the sale or grant, or the possible sale or grant, of an interest in land or the payment for an interest in land.

Remedies In cases where the statutes have prohibited duress, a wide range of remedies are available including:  Injunction: s80 TPA; s98 FTA  Ancillary orders including rescission, restitution and variation of the contract: s87 TPA; s100 FTA.  Damages: s82 TPA; s99 FTA.