Atlas Express Ltd v Kafco Ltd [1989]

Court: Court of Appeal

Basic Facts: Kafco Ltd secured a contract to supply baskets to W for six months and hired Atlas Express Ltd to transport the goods. After the initial delivery, Atlas Express Ltd realized they had underestimated the transport costs due to carton sizes. Atlas Express Ltd threatened to withhold delivery unless Kafco Ltd agreed to a higher price. Under pressure, Kafco Ltd signed the revised contract.

Issue for the Court: When will contractual re-negotiations involving threats to breach be considered duress?

Held : The court held that economic duress occurs when a party’s apparent consent is induced by illegitimate pressure, and a lack of consideration renders the new agreement unenforceable.

Tucker J found that D signed the contract under economic duress. Economic duress involves pressure that is illegitimate and coerces a party into agreeing to a contract. The revised agreement was also unenforceable due to the absence of consideration. Burrows noted that the pressure was illegitimate because D believed they could not secure an alternative carrier on short notice.

💡Leveluplaw : This case is significant for understanding economic duress in contract law, emphasizing that illegitimate economic pressure can invalidate a contract if it coerces a party into an agreement without genuine consent.