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Economic duress

  • 22-03-2011 6:15pm
    #1
    cooper1234
    Registered Users, Registered Users 2 Posts: 25 ✭


    If a company has agreed to perform an obligation under a contract and is in danger of becoming insolvent, can a voluntary increased payment to the company to perform the contract (due to no other company being able to fulfil the same obligations on time) constitute economic duress?


Comments

  • #2
    Victor
    Registered Users, Registered Users 2 Posts: 78,574 ✭✭✭✭Victor


    A company will have difficulty continuing to trade if is insolvent. Depending on the structure of the payment (is it cash flow, increased contract sum, capital injection?) and assuming the contract was originally entered into freely, I can't see any duress factor.


  • #3
    Kosseegan
    Banned (with Prison Access) Posts: 987 ✭✭✭Kosseegan


    I take it you are saying that the companty is threatenting to pull out of the contract unless it is paid more than was originally agreed. This is the case if an alternative provider could have been engaged at an earlier time but now it is too late. Could well be duress.


  • #4
    cooper1234
    Registered Users, Registered Users 2 Posts: 25 ✭cooper1234


    Kosseegan wrote: »
    I take it you are saying that the companty is threatenting to pull out of the contract unless it is paid more than was originally agreed. This is the case if an alternative provider could have been engaged at an earlier time but now it is too late. Could well be duress.

    The company says it can no longer go on with the project but it was the person to whom the service was provided that offered to pay a significant amount more in order for them to go on with the contract


  • #5
    Tom Young
    Legal Moderators, Society & Culture Moderators Posts: 4,338 Mod ✭✭✭✭Tom Young


    cooper1234 wrote: »
    The company says it can no longer go on with the project but it was the person to whom the service was provided that offered to pay a significant amount more in order for them to go on with the contract

    That is not economic duress.

    That is an offer to pay more to perform the contract. If that amount is short and the company will still trade insolvent then that is a matter for the company. Not a matter for the offeror.

    Practically such offers can cause pressure on the stakeholder but if the offeror is being honest and bona fide then no issue.


  • #6
    Reloc8
    Closed Accounts Posts: 2,857 ✭✭✭Reloc8


    cooper1234 wrote: »
    If a company has agreed to perform an obligation under a contract and is in danger of becoming insolvent, can a voluntary increased payment to the company to perform the contract (due to no other company being able to fulfil the same obligations on time) constitute economic duress?

    Who do you perceive as being potentially economically duressed herre ? Presumably the person who has voluntary agreed to increase payment to the company ?

    If so I presume you are asking from the point of view of whether that person can resist a claim for payment of the increased amount agreed.

    The clue is somewhat in the word 'voluntary'. That generally does not indicate a duressed person.

    Even aside from that what you are dealing with is effectively a fresh agreement by both sides to a new price, the company having indicated it could not perform its obligations.

    Clearly the person agreeing the higher payment was in the invidious position of being faced with non-performance by a company which would not have been able to satisfy any award of damages. However they made a practical decision to seek to procure performance at a higher cost to them rather than take the consequences of non-performance. On those bare facts, hardship on that persons part does not amount to a defence to a claim for payment by the company at the higher rate presuming the contract was performed.


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