LAWFUL ACT DURESS

• Author: TER KAH LENG
• Citation: (1995) 7 SAcLJ 208
• Published date: 01 December 1995
• Date: 01 December 1995

It is clear that the threat of unlawful action is always illegitimate. Does a threat to perform a lawful act amount to duress? The answer really depends on the cirumstances of each case. A number of English courts have accepted that such a threat may amount to duress when coupled with a demand for payment.1 In fact such a question arose for decision in CTN Cash and Carry Ltd v Gallaher Ltd,2 where on the facts of the case, the Court of Appeal upheld the deputy judge’s decision that the plaintiffs failed in their plea of economic duress.

The plaintiffs were a company running a cash and carry business from six warehouses. They purchased consignments of cigarettes from the defendant suppliers under separate contracts. The suppliers had arranged credit facilities for the plaintiffs but they had the absolute discretion to withdraw these facilities. The problem arose when the plaintiffs’ manager ordered a consignment of cigarettes at a price of £17,000 which the suppliers delivered to a wrong warehouse. The parties then agreed for the transfer of the consignment to the correct warehouse, but before this could be done, the consignment was stolen in a robbery of the first-mentioned warehouse. The suppliers believed that the goods were at the plaintiffs’ risk at the time of the theft and sent the plaintiffs an invoice for payment. The plaintiffs objected to payment but settled the bill when the suppliers made it clear that unless they paid up, their credit facilities would be withdrawn. The plaintiffs claimed for the repayment of the £17,000 on the ground that it was paid under duress.

It is clear that the plaintiffs acted under commercial pressure. They were faced with an alternative of either paying up or having their credit facilities withdrawn. Faced with this, the plaintiffs must have decided that the lesser of the two evils was to pay up. The question is whether such pressure “is one of a kind which the law does not regard as legitimate.”3 If the suppliers’ action was lawful, the result was that there was no economic duress and the plaintiffs could not recover the £17,000.

The plaintiffs’ counsel argued that the pressure was illegitimate because the clear purpose was to extort money from her clients to which the suppliers were in truth not entitled. In the circumstances, the case of duress was made out.

Steyn LJ approached the issue by looking at the distinctive features of the case before deciding whether or not there was duress. Firstly, the...