AUSTIN INSTRUMENT V LORAL CORPS

PRESENTATION

Austin Instrument v. Loral Corp.

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Duress

"Any wrongful act/threat which overcomes the free will of a party"

long-standing concept of Common Law

originally existed in British Law

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Consent

Free, informed if not = not valid

➙ economic duress ➙ duress to goods ➙ individual duress

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Proof of duress

Focus on the context

taking into account the specific circumstances and conduct

constant and existing contract

unlawful pressure

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Austin Instrument v. Loral Corp

case brief

Local Corporation Austin Instrument

Local Corporation US Navy

"We stop the current delivery unless we have a new contract with a retroactive price increase"

"We cannot default on the Navy contract so we have no choice but to agree to the price increase"

AUSTIN USESTHE ECONOMIC DURESS

LORAL OWES US MONEY

Does the threat to break a contract constitute economic duress that allows a party to recover damages?

Austin

Austin

Loral

Austin

Austin

Austin Instrument v. Loral Corp

dissenting opinion

DISSENTING OPINION

Judge Bergan

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DISSENTING OPINION

In this situation, the theory of economic duress can not be forecasted

Judge Bergan

Believes that Loral overstates the facts in order to obtain compensation

Difference between the non-existence of other suppliers being able to respond to the demand and the will to keep the same supplier

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existence of 2 points of view

Aspiration to protect one of the contracting parties from the financial abuse

idolize the principle of "contractual freedom" and "freedom of choice"

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Austin Instrument v. Loral Corp

SIGNIFICANCE

significance

AMERICAN COURTS HAVE ACCEPTED THE APPLICATION OF THE DURESS DOCTRINE TO THE GOODS

1st recognition in the form of situations known as "duress of good"

1732 recognition by english courts

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in the 1800's

Manhattan Milling Co v. Manhattan Gas & Elec. Co, (1924)

Indiana Natural & Illuminating Gas Co. v. Anthony, (1900)

City of Chicago v. Northwestern Mut. Life Ins. Co.(1905)

Chicago & Alton Railroad v. Wilmington Coal Co, (1875)

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gradually

Courts recognized that all sorts of economic pressures could create a problematic contract

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Austin Instrument v. Loral Corp

comparative law

NOTION OF DURESS IN FRANCE

"Pressure exerted on the contracting party to give their consent"article 1140

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convergences

Come as much from the contracting party as from a 3rd party to the contract

Right to threaten to exercise a regular right on the other contracting party

Calls into question the integrity of the contracting

Duress usually economic

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differences

• Takes into account the psychological aspect

• Duress is declared when one observes the accumulation of several and precise conditions

• The abuse of dependence on a third party is therefore impossible.

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THE BEST SYSTEM

two systems are very similar

Nevertheless, the French one allows a greater margin of maneuver for the judges

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