Economic duress

Overview

Recall questions on what economic duress is, illegitimate threats and the lack of a practical alternative, the factors set out in Pao On v Lau Yiu Long, and rescission of a voidable contract and the bars to it.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is economic duress?

   Model answer

   Economic duress occurs when illegitimate pressure is applied to a party to enter into a contract, typically involving threats to a person's economic interests rather than physical threats.

2. 2

   What distinguishes the nature of a threat in economic duress from ordinary commercial dealings?

   Model answer

   The threat must be illegitimate, meaning it goes beyond ordinary commercial pressure and involves conduct that the law regards as improper.

3. 3

   Under what circumstances can a threat to breach a contract amount to economic duress?

   Model answer

   A threat to breach a contract can constitute economic duress if it is made in bad faith and the threatened party has no practical alternative but to submit.

4. 4

   What must be shown regarding the consequences of the threat for a claim of economic duress to succeed?

   Model answer

   The consequences must be sufficiently serious that the victim had no realistic practical alternative but to submit to the demand.

5. 5

   Must the illegitimate threat be the sole reason the victim entered the contract for economic duress to be established?

   Model answer

   No, the victim must demonstrate that the threat was a significant cause of entering into the contract, but it need not be the only cause.

6. 6

   Which case established additional criteria for assessing economic duress beyond the basic requirements of threat and lack of practical alternative?

   Model answer

   Pao On v Lau Yiu Long.

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