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circumstances amount to duress, and suggestions were made of likely situations,
such as the threat to burn down a house, or to slash a valuable painting.
This seems reasonable, since some very serious threats to property could,
on occasions, be more coercive than minor threats to the person. However,
the problem is knowing how far the courts would go in accepting threats to
property. For example, would threats to wealth amount to duress, and if so,
what about threats to breach a contract which would damage a person’s
wealth? In fact, the cases which have followed The Siboen and the Sibotre
show that the courts have indeed accepted the idea that such threats could
amount to duress, developing the idea of economic duress, providing that
they are substantial. Most of the cases involved in this development have
arisen concerning shipping cases, since these are very valuable contracts.

This was the first time that the court really acknowledged that economic
duress could have a vitiating effect on a contract. As the concept is still
being developed, the courts are no doubt anxious not to widen the scope of
the doctrine too freely. The following case shows that the mere threat of a
breach of contract alone would not amount to economic duress, and in the
case of Pao On v Lau Yiu Long the Privy Council took the opportunity of
laying down some guidelines.

Duress and undue influence 151

North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd (1979)

(The Atlantic Baron)

The defendant shipbuilders agreed to build a supertanker for the

plaintiff company. They later threatened to breach the contract unless

10 per cent more was paid. The plaintiff company agreed to pay the

extra amount in order not to lose a valuable charter, but after delivery

of the ship attempted to recover the extra payment. It was held that the

threat of breach of such a valuable contract would have been economic

duress, but the length of time taken in bringing a claim to court tended

to indicate affirmation.

North Ocean

Shipping

Hyundai

Construction

Contract for HC to build the

Atlantic Baron for NOS

Contract to continue working if 10% more is paid

• held to be formed under economic duress

Figure 10.2