Economic duress is the threats of a business nature that forces another party without real consent to enter a commercial agreement. This is also called a business compulsion. The consequence of economic duress makes the contract voidable. The doctrine of economic duress was first canvassed by Kerr J in the Sibeon and the Sibotre. Whilst the contract was not held to be voidable for duress, Kerr J did state that where there exists coercion of the will so as to vitiate consent, it should be possible to set the contract aside. However, the commercial pressure was not enough.
The first case involves Carrbon who are a petrol producing company and Rigit who went into contract with Carrbon for diving services. In order to claim economic duress, there must be an unlawful threat or an illegitimate pressure. Rigit has made an unlawful threat to Carrbon as Rigit tells them that they cannot carry on with the contract unless the contract price goes up by 20% so therefore Carrbon has no choice but to agree to pay the extra as they cannot get any diving services elsewhere at such a short notice. The unlawful threat may breach the contract and this is shown in the cases of Atlas Express v Kafco in this case, Kafko had to fulfil K with Woolworths and so entered into a K with Atlas, a road carrier, to deliver the goods. Atlas’ depot manager estimated that one of its trailers could carry 400-600 baskets and thus that the charge would is $1.10 per basket delivered. It was essential to Kafko’s survival that it should be able to meet delivery dates and it would have been almost impossible to find an alternative carrier. Kafko signed the agreement and the goods were delivered. This case is similar in comparison with the situation of Carrbon and Rigit as it would’ve been impossible for Kafko to find an alternative carrier. However, the unlawful threat may commit a tort (this is similar to