Chapter 1 : Coercion

Definition – It is making something happen by force

S10

S14 (a) Consent is said to be free when it is not caused by coercioen as defined in
Section 15

S15 Coercion is the committing or threatening to commit any act forbidden by the
Penal Code or the unlawful detaining or threatening to detain any property to the
prejudice of any person whatever with the intention of causing any person to enter
into an agreement

Two types of coercion

i. The threatening of an act forbidden by the Penal Code

ii. The unlawful detention of properly

Nuri Asi Sdn Bhd v Fosis Corp Sdn Bhd

Facts : The plainfiff supplied goods to the first defendant and alleged that it
did so upon the second defendant giving an oral guarantee for its payment.
When the sum was unpaid , the plaintiff got the second defendant to sign
A written guarantee and sue upon it.

Held: The High Court held that the second defendant did not give an oral
guarantee that he had executed the written guarantee in very unorthodox
Circumstances.The Court dismissed the Plaintiff’s claim against the second
defendant.

CIMB Bank Bhd v Tan Hua Peng @ Tan Kwah Peng , the High Court stated
That coaxing is not coercion and persuasion is not prohibited in the way
banks may want to market their financial products
Coercion is not the same as duress under the common law

The common law of duress only recognises actual or threatened violence

To persons and threats to property.

Economic Duress – Already under a contract , feels pressured to agree to

new terms – applies when it amounts to a coercion of his will, which vitiates
contract

Barton v Armstrong

Facts : Barton and Armstrong were major company shareholders.Following

a meeting , it was agreed that Barton would buy Armstrong’s interest.Barton
and Armstrong had an agreement drawn up and it was executed.Barton then
brought an action against Armstrong claiming that he was coerced into
buying Armstrong’s share and that Armstrong had threatened to have him
murdered if he did not buy it..

The issues : Whether Barton in fact coerced or whether he signed the

agreement out of commercial necessity and Whether the agreement was
voidable.

Held: The appeal by Barton was allowed , it was held that the equitable rule
allowed for any agreement that was as a result of some duress and fraudulent
misrepresentation did enable the agreement to be set aside and considered
voidable.Even if the agreement was signed firstly out of commercial
necessity, coercion had occurred made the agreement void as duress was
likely to have an effect on a party , forcing them to sign it.

Universe Tankships Inc of Monrovia v International Transport Workers

Federation

Facts:The ITWF blacked a ship , the Universe Sentinel , to prevent it from

leaving port.They made several demands in relation to pay and conditions
and also demanded the ship owners pay a large sum of money to the
Seafarers International Welfare Fund.The ship owners agreed in order that
the ship could leave port and then sought to recover the sum paid to the
welfare fund.

Held: The money had been extracted under economic duress and could be
recovered.The House of Lords held that earlier case law had been wrong to
look at coercion of the will so as to vitiate consent.During an analogy with
the defence in criminal law where it is recognized that a defendant acting
under duress has the intention to commit the offence but is excused from the
crime because they had no choice but to submit.

North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd

Facts : The plaintiff had made a contract with a third party to hire the ship to
carry goods.The defendant promised to build the ship for the plaintiff at an
agreement price.Subsequently , the defendant asked for more payment and
threatened to stop work on building the ship if its demands were not
complied with it. The plaintiff paid the amount and later brought
proceedings to recover the amount paid.

Held : The Court held that the case involved economic duress the defendant
had threatened economic loss to the plaintiff.On the facts , the court found
that the plaintiff had agreed to pay the additional 10% under economic
duress and the contract was initially voidable.

Malaysian Position on Economic Duress

Teck Guan Trading Sdn Bhd v Hydratek Engineering Sdn Bhd & Ors
( Doctrine of economic duress )

Facts: Teck Guan Trading Sdn Bhd ( The plaintiff) agreed to sell round bars
to Hydrotek Engineering Sdn Bhd ( first defendant ) , the payment for which
was guaranteed by John Fong Nyuk Foh ( second defendant ) and Christine
Voo Heng Choong ( third defendant ). The dispute here mainly concerned
the price of the round bars.The defandants contend that the price was stated
as RM1180 in a document dated 27 July 1990.However , the plaintifAlleged
that there was a typing error as the actual price should be RM1244.The
plaintiff produced a letter dated 18 September 1990
By the first defendant agreeing to pay RM1244 for the round bars.

Held : The High Court dismissed the appeal of all the defendants at costs

Perlis Plantation Berhad v Mohammad Abdullah , the High Court held that
the Contract Act does not provide for any form of coercion other than as
defined by S 15

S 73 A person to whom money has been paid or anything delivered by

mistake or under coercion , must repay or return it

The courts have held that the meaning of coercion in S 73 is different from
the meaning of coercion in S 15

Kanhaya Lal v National Batik of India Ltd

Facts : The plaintiff was the proprietor of Delhi Cotton Mills while the
defendant was a bank which obtained judgment against another company ,
Delhi Cotton Mills Co.Due to the similarity between the company’s name
and the plaintiff’s , the plaintiff’s property was wrongly attached.The
plaintiff was compelled to pay the sum due under the judgment by Delhi
Cotton Mills Co in order to prevent attachment of its property.

Held : The Privy Council held that the plaintiff was entitled to the return of
the money. It was held that the definition of coercion under S 15 only
applies to the question whether there was free consent to an
agreement.Under S 10 , coercion would be limited to unlawful acts done
with intention of causing a person or persons to enter into an agreement
Chin Nam Bee Development Sdn Bhd v Tai Kim Choo & Ors ( Malaysian
case)

Facts : The defendant , a housing developer told the purchasers to pay an

additional $4,000 and threatened to cancel their bookins if they did not do
so.The purchasers paid the said sum and later claimed for its return on the
ground that it was paid under coercion under S 73 whilst the defendant
contended that this did not fall within coercion as defined in S 15

Held : The High Court referred to the Privy Council decision of Kanhya Lal
and held that the meaning of coercion under S 73 is wider and should be
given its ordinary and general meaning.

Effect of and relief for coercion

S 19(1) When consent to an agreement is caused by coercion , fraud or

misrepresentation , the agreement is a contract voidable at the option of the
party whose consent was so caused.