Commercial Exploitation in Construction Contracts: the Role of Economic Duress and Unjust Enrichment

Hamish Lal

December 2005

A paper based on a commended entry in the Hudson Prize Competition 2004

If a party to a construction project comes under pressure from another party to renegotiate part of the present contract or to forego some benefit under it, perhaps for a promise of future work, and reluctantly agrees to do so, when might such pressure be severe enough to have legal consequences?The paper looks at two doctrines potentially available in such a situation: economic duress, which if the victim can establish it leads the whole contract to be voidable; and restitution, through which the victim can gain the amount by which the other party has been unjustly enriched.The paper discusses recent case-law on both doctrines, concluding that the tests for economic duress raise a high threshold for a claimant, partly because courts are reluctant to allow contracts to be overturned; and that unjust enrichment therefore offers a claimant better chances of redress to in situations of excessive commercial pressure.

Introduction - Summary - Part A: economic duress - ecognition in English law - The tests for economic duress - DSND: no economic duress - Carillion: economic duress established - A risky enterprise - The jurisprudence of economic duress - Part B: estitution to the rescue - Factors making the enrichment 'unjust' - Conclusion.

The author: Dr Hamish Lal.

Text: 14 pages

PDF file size: 84k