Opel v Mitras Automotive (UK) Ltd [2008]
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Opel v Mitras Automotive (UK) Ltd [2008] EWHC 3205 (QB) addressed the issue of economic duress arising from a threat to cease supplies by a supplier, resulting in significant financial losses for the party receiving the supplies. The court deliberated on allegations of economic duress arising from a threat to terminate supplies made by Mitras Automotive, a supplier to a joint venture involving Opel and Renault.
The joint venture had issued a notice for the early termination of the supply contract within six months. In response, Mitras threatened an immediate termination of supply, posing a significant risk of substantial financial losses for the joint venture. Subsequently, the parties entered into a compromise agreement, wherein Mitras was to receive compensation for agreeing to the early termination. An initial attempt to secure an injunction without notifying Mitras was rejected, prompting the joint venture to sue for the rescission of the contract on grounds of duress.
Donaldson QC presided over the case and considered the legitimacy of the pressure exerted by Mitras. While acknowledging the legitimate concern of the joint venture for the security of their supply, the judge dismissed the notion that seeking an injunction could nullify the pressure created by Mitras's threat. Conclusively, the judge determined that the threat to cease supplies, coupled with the resulting pressure, was illegitimate. Consequently, the joint venture was granted a declaration that the compromise agreement was voidable and had been avoided, enabling the recovery of payments made under that agreement.
Regarding the issue of consideration, the court affirmed that Mitras's promise to continue the supply constituted adequate consideration. This finding was aligned with the legal precedent set in Williams v Roffey [1989]. As a result, the joint venture could not rely on the absence of consideration as an alternative or additional ground to the claim of economic duress.
In summary, the court's ruling established that Mitras's threat to terminate supplies, causing significant financial repercussions, amounted to economic duress. The compromise agreement was deemed voidable, and the joint venture was entitled to recover the payments made under the voided agreement.
The joint venture had issued a notice for the early termination of the supply contract within six months. In response, Mitras threatened an immediate termination of supply, posing a significant risk of substantial financial losses for the joint venture. Subsequently, the parties entered into a compromise agreement, wherein Mitras was to receive compensation for agreeing to the early termination. An initial attempt to secure an injunction without notifying Mitras was rejected, prompting the joint venture to sue for the rescission of the contract on grounds of duress.
Donaldson QC presided over the case and considered the legitimacy of the pressure exerted by Mitras. While acknowledging the legitimate concern of the joint venture for the security of their supply, the judge dismissed the notion that seeking an injunction could nullify the pressure created by Mitras's threat. Conclusively, the judge determined that the threat to cease supplies, coupled with the resulting pressure, was illegitimate. Consequently, the joint venture was granted a declaration that the compromise agreement was voidable and had been avoided, enabling the recovery of payments made under that agreement.
Regarding the issue of consideration, the court affirmed that Mitras's promise to continue the supply constituted adequate consideration. This finding was aligned with the legal precedent set in Williams v Roffey [1989]. As a result, the joint venture could not rely on the absence of consideration as an alternative or additional ground to the claim of economic duress.
In summary, the court's ruling established that Mitras's threat to terminate supplies, causing significant financial repercussions, amounted to economic duress. The compromise agreement was deemed voidable, and the joint venture was entitled to recover the payments made under the voided agreement.
