Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and The Sibotre)
Kerr J recognised that economic duress could make a contract voidable, although the pressure on the facts was only commercial.
Facts
The owners of two ships, the Siboen and the Sibotre, chartered them to Occidental at a high rate. When the freight market collapsed, the charterers, falsely claiming that they would go bankrupt and had no substantial assets, threatened to stop using the ships unless the owners agreed to reduce the hire. The owners agreed to reduce the hire. They later discovered that the charterers' statements were untrue and sought to recover the difference.
Legal principle
Kerr J held that the owners were entitled to rescind the variation agreement because it was induced by fraudulent misrepresentation. He also considered whether it was voidable for economic duress, and accepted that, in principle, a contract can be voidable for duress where the pressure goes beyond the person's will, so that their consent is not truly voluntary. However, on the facts, the owners had acted under commercial pressure, not duress. The case was the first in English law to recognise economic duress as a possible ground for avoiding a contract.
Related cases on duress and undue influence
- Allcard v Skinner (1887) 36 Ch D 145
- Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833
- Barclays Bank plc v O'Brien [1994] 1 AC 180
- Barton v Armstrong [1976] AC 104
- CIBC Mortgages plc v Pitt [1994] 1 AC 200
- Credit Lyonnais Bank Nederland NV v Burch [1997] 1 All ER 144
- CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714
- Lloyds Bank Ltd v Bundy [1975] QB 326
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