THREAT TO WITHHOLD DELIVERY HELD TO AMOUNT TO ECONOMIC DURESS

Carillion Construction Ltd v Felix (UK) Ltd [2001] BLR 1

In Carillion Construction Ltd v Felix (UK) Ltd [2001] BLR 1 Mr Justice Dyson held that a threat by sub-contractors to withhold deliveries to which the main contractors were entitled unless the main contractors agreed the final account due to the subcontractors amounted to duress with the result that the main contractors were entitled to set aside the agreement to pay the settlement agreement which had been concluded as a result of the pressure exerted by the sub-contractors. The main contractors were able to establish on the evidence that the sub-contractors’ threatened breach of contract amounted to illegitimate pressure which was a significant cause inducing them to enter into the contract and which left them with no practical choice but to enter into the settlement agreement. Crucially, the main contractors moved swiftly to set aside the agreement whenever they were free from the pressure of the sub-contractors. The case demonstrates that it is possible to make out a claim of duress by threatened breach of contract where the evidence establishes that one party was induced by the other’s threatened breach of contract to enter into a disadvantageous transaction and that party moves swiftly to set aside the transaction whenever it is free of the pressure.