CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714

Court of Appeal

Basic Facts: D (Gallaher Ltd) mistakenly delivered cigarettes to the wrong warehouse, where they were stolen. D demanded payment from C (CTN Cash and Carry Ltd), threatening to cut off their credit facilities if payment wasn’t made. C paid under protest and later sought restitution, claiming economic duress.

Issue for the Court: When is a threat considered illegitimate in the context of economic duress?

Held : The court held that economic duress can exist even if the threat is lawful, particularly if it involves a demand for money under commercial pressure.

• Steyn LJ found that while D's threat was motivated by self-interest, it did not constitute economic duress because D had a legal right to demand payment. However, lawful act duress can still be recognized if it involves illegitimate pressure, though it was not proven in this case.

💡Leveluplaw : This case clarifies the boundaries of economic duress, emphasizing that while lawful threats can constitute duress in certain circumstances, they must involve illegitimate pressure.