Development of the Doctrine of Economic Duress - Coursework Example

Contract Law Table of Contents Introduction 3 Discussion 4 A Brief Understanding about the Development of the Doctrine of Economic Duress 4 Effects of a Clear Doctrine of Economic Duress on the Doctrine of Consideration 6 Conclusion 10 References 12 Introduction In contract law, the doctrine of consideration denotes the benefits obtained under an agreement and compensated for the promise made by a promisor. In this regard, a promisor is regarded as such individual who undertakes the promise. Certain rules have been established in order to support the doctrine of consideration for obtaining mutual benefits by the parties involved in a specific contract. Such rules can be ascertained as the consideration to be based on present as well as future but not on past, it should be included in every contract phase and there must lay the evidence of making a promise amid a promisor and a promisee1. From a similar perspective, the doctrine of economic duress in relation to a specific contract signifies its occurrence during the time when an involved party tends to provide threats in terms of cancelling a contract due to non-mitigation of the party’s demands by the other involved party. Thus, it is clear that a party involved in a contract lay under the situation of economic duress when no ultimate choices or practical options are left behind within such party. With this concern, the various constituents of economic duress include the existence of an ongoing contract amid the involved parties, evidence of threatening in the form of cancellation of any contract and acceptance to new contractual terms2. In relation to the above context, the prime intent of this coursework is to discuss about how the doctrine of consideration has been affected by the advancement of a clear doctrine of economic duress. This discussion will be mainly analyzed by taking into concern the provided quotation “In terms of its result and the reasons advanced by the judges, however, Williams v Roffey would seem to permit any variation of a contract, ...”. Discussion A Brief Understanding about the Development of the Doctrine of Economic Duress Prior to discussing about how the doctrine of consideration has been influenced by the doctrine of economic duress, it is much essential to acquire a brief idea about the factors contributed in making the development of a clear doctrine of economic duress. It will be vital to mention that the development of a clear doctrine of economic duress is witnessed by the establishment of disparities amid the payments and the agreements within a specific contract. Apart from this, there also exist certain other imperative factors based on which the development in clear doctrine of economic duress could be established. In this regard, one of such imperative factors could be ascertained as the limits of the court’s capability towards providing relief for duress, which do not lie along the boundaries relating to consideration. The other factor, which contributed in making greater development of a clear doctrine of economic duress, is the evidence of emerging threats of having breach in contracts or cancelling the same. It is to be affirmed that the contribution of the above discussed factors in developing a clear doctrine of economic duress is reckoned to be a latest one, rather that conducting the same in previous years3. In relation to the above analysis, it must be mentioned that the development of a clear doctrine of economic duress is expected to occur owing to the reason that the various usual law conceptions concerning consideration and more importantly undue influence failed to deal with the problems persisted within a specific contract. It can be apparently observed that the development of such doctrine has not been much simple as well as easy, as there existed a blurred or a thin line between normal along with hard commercial bargaining and economic duress. Specially mentioning, the historical advancement of a clear doctrine of economic duress is duly considered as well as compared to other contractual based doctrines that entail unconscionability and undue influence4. On a further note, immense difficulties were faced while categorizing the conditions based on which the involved parties in an individual contract will desire to make necessary adjustments with the objective of conducting ongoing transactions in an efficient way. Thus, in order to address and mitigate such rising difficulties, it can be affirmed that the development of a clear doctrine of economic duress has been made5. It is worth mentioning that the above stated factors contributed in making wider development of a clear doctrine of economic duress, which eventually affected the doctrine of consideration at large. This has been analyzed in detail below with the incorporation of the provided quotation and certain relevant cases. Effects of a Clear Doctrine of Economic Duress on the Doctrine of Consideration From the perspective of performing functions of preventing unfairness underlying a specific contract, the impact of a clear doctrine of economic duress especially on the doctrine of consideration could be witnessed. In precise, it can be affirmed that the doctrine of consideration is largely affected by the recent advancements made in the doctrine concerning economic duress. This can be justified that the doctrine of consideration is reckoned to be an unsatisfactory tool of safeguarding against unlawfully induced promises. This implies that the existence of consideration does not fully make a contract to become fair. Thus, by considering these negative attributes of consideration, the courts do not get involved into measuring the adequacy of consideration. This clearly suggests of the fact that normal consideration could be offered to deliver an inequitable and otherwise independent promise enforceable. It is strongly believed that apart from the effects imposed by the development of a clear doctrine of economic duress on the principle of consideration, certain discrete doctrines are also observed to get unfavourably affected by the same. In this regard, such discrete doctrines could be duly measured in the form of fraud, undue influence, normal consideration and unconscionable bargains among others6. Based on the above context, an attempt is made towards discussing the effects imposed by the development of a clear doctrine of economic duress on the principle of consideration through the analysis of the provided quotation i.e. “In terms of its result and the reasons advanced by the judges, however, Williams v Roffey would seem to permit any variation of a contract, ...”. This quotation is related to the case of ‘Williams v Roffey Bros & Nicholls (Contractors) Ltd. [1991].’ In this case, a nonappearance of consideration could be found, which one way or the other implies that the doctrine of consideration got affected by wider advancement of a clear principle of economic duress. In light of the above provided quotation, the influence of recent developments made in the principle of economic duress specifically on the doctrine of consideration relating to the case of Williams v Roffey could be determined based on the grounds of protecting the involved parties while experienced any sort of variation in the contractual procedure. The major participants of the case were identified to be Roffey Bros. & Nicholls (Contractors) Ltd. and Lester Williams to whom Roffey Bros. subcontracted carpentry on behalf of Shepherds Bush Holding Association. The subcontract was settled for £20, 000, which was to be paid in part payments during the agreed time span. It can be apparently observed that as per the agreed terms, certain works were made and £16, 200 was paid, as Williams faced financial difficulties while completion. Thus, as a consequence of the previously mentioned activity, Roffey Bros. became liable under the dimension of penalty clause for late completion in the respective works7. After conducting a meeting, the involved parties of the contract promised to pay an additional £575 per flat for completing the work on usual time. Based on this situation, the issue mainly raised to determine whether there existed adequate consideration for increasing the amount to be paid for on-time completion of the contract. It must be portrayed that the decision adopted in the meeting regarding the additional payment of £575 per flat for ensuring on-time completion of the work had certainly caused variations in the overall contractual process, resulting in making the principle of consideration to get affected by broader advancement in a clear standard of economic duress. In accordance with the doctrine of consideration, it is to be affirmed that consideration is no longer to be executed in the situation wherein variation in the entire contractual process is witnessed. This variation can be exactly witnessed in association with the case of ‘Williams v Roffey Bros & Nicholls (Contractors) Ltd. [1991]’ for adopting the decision of making extra payments with the objective of completing the respective works within a predetermined timeframe. However, in response, the court supported the fact that consideration has been made in the contractual process by the involved parties in terms of making additional payments as promised in order to avoid the crucial concern of penalty clause. Despite of the responses of the court, it is worth mentioning that the above stated variation witnessed in the case could be duly considered as one of the prime reasons, which justifies the provided quotation i.e. “In terms of its result and the reasons advanced by the judges, however, Williams v Roffey would seem to permit any variation of a contract, ...”. Considering the decision of the court relating to the case of Williams v Roffey, it can be affirmed that this case has the potentiality of changing the lawful regulations as settled with the intention of deriving maximum possible benefits and positive outcomes8. With regards to the above stated context, another legal case of "Adam Opel GmbH and Renault SA vs. Mitras Automotive (UK) Ltd." represents the fact that the doctrine of consideration has got affected by the advancement of a clear principle of economic duress. In relation to the case, the judge apparently noted the requirements associated with duress to be met under varied conditions and legal norms. Apart from this, more importantly, the judge also ruled that there lays the probability of evading the contract and thus the claimants were permitted to get recovery from the paid sums under the established contractual norms as well as practices. Based on the above stated case study, the claimants were mainly observed to be the main manufacturers including Adam Opel, which is regarded as a subsidiary business firm within the Group of General Motors and Renault. On the other hand, the defendant was Mitras Automotive (UK) Ltd who was the sole supplier of various plastic units based on which the bumpers of the vans are mounted. The case mainly emerged owing to the declaration made by the aforementioned claimants i.e. GMR regarding no longer requirement of Mitras as the supplier after necessitating a change required to be made for developing a new van, whose code has been named as X83. With this concern, GMR provided a notice of six months to the suppler i.e. Mitras with confirming the point that they will cease its involvement in the entire process associated with the production process of X83. The dispute mainly emerged owing to the refusal of Mitras to receive the payments provided by GMR, which was mentioned during the negotiation. In this regard, Mitras justified the fact that it will not receive any sort of payment make by GMR, until the claimants i.e. GMR provide the amounts to Mitras, which was requested while making the contract for supplying the required products9. Based on the standpoints of duress law, GMR, acting as the claimants of the case, argued that the agreement formed is deemed to be void, as the same was made under the situation of duress and thus there does not exists any sort of consideration. Justifiably, the presence of consideration was not felt in the case, as no such strong promise was identified to be made by GMR concerning the amount to be paid for the services deliver by Mitras. Thus, it can be affirmed that there does not exist any sort of lawful contractual obligation, while formulating the contract that took place between GMR and Mitras to be void. While providing the judgment relating to the above stated case, David Donaldson QC elaborated that, the fundamental principles of duress could be applied to the same, resulting in affecting the principle of consideration by a certain degree. In accordance with the explanation made by David Donaldson QC, it was ascertained that the general principle could be related to the case of GMR and Mitras owing to two special reasons. One of such reasons included the existence of threat provided by the defender i.e. Mitras in the form of not receiving the payments made by the claimants GMR until the dues of final settlement are met. Apart from this, the other reason for which the principle of economic duress gets associated with the aforementioned case was the imposition of financial pressures laid by Mitras on GMR based on the existing contractual obligations that formed during the initiation of the contract. It will be vital to mention that the doctrine of consideration in relation to the stated case of GMR and Mitras has been affected by recent developments in a clear policy of economic duress because of various ways. One of these ways included the threat of Mitras to discontinue with its respective supplies, which forced GMR towards agreeing as well as capitulating to the terms as well as conditions laid down by Mitras. In addition, the other way entailed inducing GMR to pay additional amounts in making the contractual obligations to be legally performed as well as treated under valid and legal consideration that could be largely considered in alignment with the agreed terms amid the parties. It must also be mentioned that the principle concerning economic duress gets associated with the case of GMR and Mitras in the form of determining whether the promise made by the involved parties in the contract possessed the capability of generating new contracts and most vitally adjusting the potential terms of a specific existing agreement10. Conclusion Based on the above analysis and discussion, it is evident that the doctrine of consideration has been affected by rapid advancement of a clear doctrine of economic duress through various ways. In light of the provided statement i.e. “In terms of its result and the reasons advanced by the judges, however, Williams v Roffey would seem to permit any variation of a contract, ...”, the case of Williams v Roffey [1991] mainly supports this statement. This is mainly through affirming that the doctrine of consideration is no longer executed for safeguarding a participant, if there exist any sort of variation in the entire contractual procedure. This particular rule has been passed to the principle of economic duress, making the doctrine of consideration to become void in such a scenario. Despite of the above provided statement, the notion concerning the effects imposed by a clear doctrine of economic duress on the principle of consideration could be better understood by analyzing the case of GMR Mitras. This particular case highlighted the fact that adhering to the general principles of economic duress that encompassed providing threatening to the involved party and imposing financial pressures eventually made the doctrine of consideration to become void in the case. References Mwenda Emelin, ‘An Evaluation Of The Doctrine Of Economic Duress: A Case Of Tobacco Board Of Zambia V. Tombwe Processing Limited’ [2013] accessed April 10 2015. Poole Jill, Casebook on Contract Law. (Oxford University Press, 2014). Palmer A Edwards and Dodge, ‘Commercial Litigation Review’ [2008] accessed April 10 2015. Stone Richard, The Modern Law of Contract. (Routledge, 2013). Stewart, A, ‘Economic Duress - Legal Regulation of Commercial Pressure’, [1984] 410-441. Teeven Kevin M, Promises on Prior Obligations at Common Law. (Greenwood Publishing Group, 1998). Twyford J Wilson, ‘The Doctrine of Consideration’, [2002] 1-78. Valente Dena, ‘Enforcing Promises’, [2010] 1-54. Read More