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Legal Terms – Economic Duress
Traditionally, in contract law, a claim asserting that a contract was voidable due to *duress could only succeed if the transaction was induced by a threat to the individual (i.e., physical duress) (Skeate v Beale (1840) 11 Ad & El 983, 113 ER 688). A contract may now be voidable due to economic duress, as established in Occidental Worldwide Invest Corporation v Skibs A/S Avanati [1976] 1 Lloyd’s Rep 293, which refers to the unlawful exertion of economic pressure to compel an individual to engage into an agreement. The fundamental components include the issuance of an illegitimate threat (e.g., to violate a current contract or to perpetrate a tort), that the coercion substantially influences the aggrieved party to consent to the contract, and that the aggrieved party possesses no viable alternative to acquiescing to the terms proposed by the individual making the threat (Universe Tankships Inc. of Monrovia v International Transport Workers Federation [1983] 1 AC 366 (HL)). A third type is duress of goods, defined as the unlawful retention of another person's property, compelling that party to acquiesce. The precise legal acknowledgment of this category remains incomplete (Dimskal Shipping Co SA v International Transport Workers’ Federation (The Evia Luck) [1992] 2 AC 152 (CA)).
Traditionally, in contract law, a claim asserting that a contract was voidable due to *duress could only succeed if the transaction was induced by a threat to the individual (i.e., physical duress) (Skeate v Beale (1840) 11 Ad & El 983, 113 ER 688). A contract may now be voidable due to economic duress, as established in Occidental Worldwide Invest Corporation v Skibs A/S Avanati [1976] 1 Lloyd’s Rep 293, which refers to the unlawful exertion of economic pressure to compel an individual to engage into an agreement. The fundamental components include the issuance of an illegitimate threat (e.g., to violate a current contract or to perpetrate a tort), that the coercion substantially influences the aggrieved party to consent to the contract, and that the aggrieved party possesses no viable alternative to acquiescing to the terms proposed by the individual making the threat (Universe Tankships Inc. of Monrovia v International Transport Workers Federation [1983] 1 AC 366 (HL)). A third type is duress of goods, defined as the unlawful retention of another person's property, compelling that party to acquiesce. The precise legal acknowledgment of this category remains incomplete (Dimskal Shipping Co SA v International Transport Workers’ Federation (The Evia Luck) [1992] 2 AC 152 (CA)).
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