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Economic Duress: Progress Bulk Carriers Vs Tube City

Do you like driving a hard bargain? If you do, or are involved in commercial negotiations, you should be aware that the High Court has recently held that conduct which is not in itself unlawful may still constitute economic duress and may therefore render a contract voidable.

In this case, the owners of a cargo ship hired out to hirers but then ‘double-booked’ reneged on assurances given by them to the hirers to find an alternative vessel and provide compensation for all damages suffered. Instead the owners sought to use the hirers’ urgent need for a vessel to obtain the hirers’ agreement not to claim for damages. The owners’ behaviour “backed the hirers into a corner,” forcing the hirers to agree to a reduced compensation offer in order to secure the alternative vessel. The agreement contained a waiver of the hirers’ rights against the owners.

The hirers signed the agreement but did so under protest. As the tough bargaining had arisen out of the owners’ repudiatory breach of contract, the hirers succeeded in arguing that the agreement to waive their claim was obtained by economic duress and should be set aside.

For further details on this case speak to Toby Stroh, Partner and Head of Druces LLP’s Corporate & Commercial team and see our briefing note below.

Corporate & Commercial Briefing Note Economic Duress Progress Bulk Carriers v Tube City