paramount need in this important field is that these minimum
requirements should be clear, simple and practically operable.”- The problem of sharing loss where neither party had acted with any
devious intention arose in Cheese v Thomas (1993) where it was said that
if an investment was made which became worth less in value, the two
parties would share the effect of the loss.
This whole area is still developing, but it is clear that the courts will still look
for free exercise of independent will, which is the essence of contract law.
Inequality of bargaining power
It has been said, notably by Lord Denning in Lloyds Bank v Bundy, that all
of these cases could be settled by examining whether the parties are of
equal bargaining power, and setting aside the contract where it was
‘unconscionable’, or against the court’s conscience. Support for this
approach was found in Watkin v Watson-Smith (1986). However, in
National Westminster Bank v Morgan, the House of Lords had rejected
Lord Denning’s wider view, taking a traditional approach. The courts will
not, they said, protect persons against what they regard as mistakes, merely
because of inequality of bargaining power. Nevertheless, Lord Denning’s
approach, although his personal view, does have merit, perhaps ahead of its
time. We await developments.
Summary
Duress
Definition
Unfair pressure which persuaded a party to contract, arising from physical
violence or unlawful constraint, or the threat of it, to the party or someone close.
Originally a common law doctrine, therefore strict adherence to the doctrine
- Cumming v Ince, Kauffman v Gerson. Effect: the contract is void.
Development of economic duress
- Threats to property did not amount to duress at common law – Skeate v
Beale. - Slight relaxation (a very serious threat may amount to duress) – The
Siboen and The Sibotre. - Recognition that threat to breach a contract causing financial loss could
be economic duress – The Atlantic Baron. - Economic duress found in a shipping case – The Universe Sentinel.
162 Contract law