Occidental Worldwide Investment v Skibs (The Sibeon & The Sibotre) [1976] 1 Lloyds Rep 293

The defendants chartered two vessels from the claimant. The defendants told the claimants that they would go bankrupt if they did not lower the cost of charter. This was completely untrue. The claimants feared that they would lose valuable customers and they were also were owed substantial amounts of money by the defendant which they feared they would lose if the defendants did become insolvent. The claimants therefore agreed to renegotiate the contract to lower the cost of charter. They later sought to have the renegotiated contract set aside.

Held: Whilst recognising that it would be possible to render a contract voidable for economic duress, it was not established in this case. To amount to economic duress there had to be a coercion of the will so as to vitiate consent. Commercial pressure was not sufficient.

Note: This was the first case where economic duress was recognised as giving rise to a cause of action. More recent cases look to absence of choice rather than coercion of the will vitiating consent. See: The Universe Sentinel

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