CTN Cash and Carry Ltd v Gallaher Ltd [1993]
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CTN Cash and Carry Ltd v Gallaher Ltd [1993] EWCA Civ 19 revolved around the concept of economic duress and whether an act, even if lawful, could still be considered as constituting economic duress.
The dispute arose between CTN Cash and Carry Ltd and Gallaher Ltd concerning the payment for cigarettes that were delivered to the wrong warehouse and subsequently stolen before Gallaher Ltd could retrieve them. Gallaher Ltd asserted that CTN was liable for the payment, as the risk had already passed. In response, Gallaher Ltd threatened to withdraw CTN's credit facility for future transactions, a right they possessed for any reason. Faced with this threat, CTN made the payment. However, it was later determined that CTN was not, in fact, liable for the lost cigarettes, leading them to seek repayment.
In delivering the judgment, Steyn LJ acknowledged that the threatened withdrawal of future credit did not amount to duress in this specific case. However, he refrained from making a categorical statement that there could never be a scenario of lawful act duress in a commercial context. Steyn LJ expressed reservations about such a categorical stance, describing it as a radical one with far-reaching implications that could introduce a substantial and undesirable element of uncertainty in the commercial bargaining process.
Despite recognising the unattractive outcome where the defendants were allowed to retain a sum that was not genuinely due to them, Steyn LJ concluded that the law compelled such a result in this particular instance. This case highlights the nuanced considerations involved in determining economic duress and the potential implications of recognising 'lawful act duress' in commercial dealings.
The dispute arose between CTN Cash and Carry Ltd and Gallaher Ltd concerning the payment for cigarettes that were delivered to the wrong warehouse and subsequently stolen before Gallaher Ltd could retrieve them. Gallaher Ltd asserted that CTN was liable for the payment, as the risk had already passed. In response, Gallaher Ltd threatened to withdraw CTN's credit facility for future transactions, a right they possessed for any reason. Faced with this threat, CTN made the payment. However, it was later determined that CTN was not, in fact, liable for the lost cigarettes, leading them to seek repayment.
In delivering the judgment, Steyn LJ acknowledged that the threatened withdrawal of future credit did not amount to duress in this specific case. However, he refrained from making a categorical statement that there could never be a scenario of lawful act duress in a commercial context. Steyn LJ expressed reservations about such a categorical stance, describing it as a radical one with far-reaching implications that could introduce a substantial and undesirable element of uncertainty in the commercial bargaining process.
Despite recognising the unattractive outcome where the defendants were allowed to retain a sum that was not genuinely due to them, Steyn LJ concluded that the law compelled such a result in this particular instance. This case highlights the nuanced considerations involved in determining economic duress and the potential implications of recognising 'lawful act duress' in commercial dealings.
