Via Steve Hedley‘s Private Law Theory blog, I am delighted to learn of Charmaine Chang “When a Contract Falls Short: A Special Case for Restitution under Duress in Unjust Enrichment” (2024) 6 City Law Review 30 (CityLR (pdf) | SSRN); the abstract provides

The English law of unjust enrichment deals with situations where it is unjust for someone to receive a benefit without paying for it. Duress is one of the unjust factors that allows for restitution.

The recent approach of the court assumes the same test for duress in contract and unjust enrichment as in CTN Cash and Carry. This is problematic in cases where there are no valid contracts in play. First, this obscures the normative foundation of unjust enrichment. The higher threshold for establishing duress in contract law is justified by its own principles and aims which are not present in unjust enrichment. Second, the existing grounds of recovery that centre on the application of pressure to the claimant and third-party cases in duress show that duress in unjust enrichment is primarily claimant-sided. It is not concerned with the reprehensible conduct of the defendant.

This article argues for a lower threshold to establish duress in unjust enrichment. The distinction between recovery of contractual and non-contractual payments on grounds of duress should be reinstated, as in earlier authorities such as Skeate v Beale. The rigid and overly complicated categorisation of duress in contract law should not be followed in unjust enrichment. Instead, this article argues for a unifying principle that centres on the question of whether the claimant made the payment under illegitimate pressure, but not the degree of the defendant’s reprehensibility. This claimant-sided approach is readily analogisable with existing unjust factors, including the archetypal unjust factor of mistake, and the other few grounds of recovery that centre on the application of pressure to the claimant.

This article is highly recommended. From a similar starting point, and drawing similar distinctions, I would go further.

In the law of Contract, the mistake that will render a contract void at law is a fundamental one (see, eg, Bell v Lever Bros Ltd [1932] AC 161, [1931] UKHL 2 (15 December 1931); Fitzsimons v O’Hanlon [1999] 2 ILRM 551 (Budd J)). It used to be thought that, where there was no contract, a claim in Restitution for Unjust Enrichment based on mistake should apply the same test, that the mistake was a fundamental one (see, eg, Norwich Union Fire Insurance Society Ltd v Wm H Price Ltd [1934] AC 455, [1934] UKPC 24 (8 May 1934); National Bank v O’Connor & Bowmaker (1969) 103 ILTR 73 (Budd J)). But it is now clear that “it is sufficient to ground recovery that the … [plaintiff’s] mistake should have caused” the plaintiff to enrich the defendant (eg, Deutsche Morgan Grenfell Group plc v Inland Revenue (25 October 2006) [2007] 1 AC 558, [2006] UKHL 49 [60] (Lord Hope) (emphasis added); see also [84] (Lord Scott) and 143 (Lord Walker); Barclays Bank Ltd v WJ Simms Son & Cooke (Southern) Ltd [1980] QB 677, 694 (Goff J); Donal Rigney Ltd v Empresa De Construcoes Amandio Carvalho SA [2009] IEHC 572 (27 November 2009) (Laffoy J)). Moreover, whilst the old law drew distinctions that set up various categories of mistake, such as the distinction between mistake of fact and mistake of law, there is no justification in the modern law for drawing such distinctions; so, for example, in the case of a mistake of law, the only question in the law of Contract is whether the mistake is fundamental (see, eg, Brennan v Bolt Burdon [2005] QB 303, [2004] EWCA Civ 1017 (29 July 2004)), and the only question in the law of Restitution for Unjust Enrichment is whether the plaintiff’s mistake caused the defendant’s enrichment (see, eg, Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, [1998] UKHL 38 (29 October 1998) (Lord Hope) referring to David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, [1992] HCA 48 (7 October 1992) [39] (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ, in a joint judgment); Vanguard Auto Finance Ltd v Browne [2014] IEHC 465 (14 October 2014) (Barton J)). As a consequence, in the latter context, since causation is the only relevant question, recovery is no longer limited to so-called liability mistakes: it “is hard to see a good reason, either in principle or in practice, for holding that a person should be entitled to recover a payment made under a mistake, if that mistake relates to the question of his liability, but that he should not be entitled to recover the payment if the mistake was of some other nature” (Nurdin & Peacock plc v DB Ramsden & Company Ltd [1999] 1 WLR 1249, [1999] EWHC 275 (Ch) (05 February 1999) (Neuberger J)).

In both the contractual and the restitutionary contexts, the policy of remedying the impairment of a plaintiff’s autonomy is given effect by recognising that a mistake is in play. On the one hand, in the law of Restitution for Unjust Enrichment, any countervailing policies, such as a defendant’s reliance interest, are given effect by means of defences, such as change of position (see, eg, Kleinwort Benson Ltd (above)). Thus, in such cases, it is sufficient for a plaintiff to demonstrate simply that the mistake caused the enrichment. On the other hand, in the law of Contract, countervailing policies, such as a defendant’s reliance interest, or the “… imperative … that the law ought to uphold rather than destroy apparent contracts” (Associated Japanese Bank (International) Ltd v Credit du Nord SA [1989] 1 WLR 255, 268 (Steyn J); Brennan v Bolt Burdon (above) [28] (Bodey J); Fitzsimons v O’Hanlon (above) (Budd J)) are given effect by qualifying or limiting the kinds of mistake which will be permitted to render the contract void. Thus, in such cases, it is necessary for a plaintiff to demonstrate that the mistake was a fundamental one. That adjective gives effect to the various competing policies at play in contractual situations. And, where there are no such competing policies, as where the claim is simply for restitution for unjust enrichment, there is no need for such an adjective, and the question is simply whether the mistake caused the enrichment.

Turning to duress, a similar analysis might go as follows. In the law of Contract, the type of duress that would render a contract void at law should be when the pressure is illegitimate. It may have been thought that, where there was no contract, a claim in Restitution for Unjust Enrichment based on duress should apply the same test, that the pressure should be illegitimate. But it now ought to be sufficient to ground recovery that the pressure upon the plaintiff should have caused the enrichment of the defendant. Moreover, whilst the old law drew distinctions that set up various categories of duress (such as, for example, duress of the person, duress of goods, duress colore officii, economic duress, threats to prosecute or publish information, lawful act duress, and so on), there is no justification in the modern law for drawing such distinctions; the only question in the law of Contract should be whether the pressure is illegitimate, and the only question in the law of Restitution for Unjust Enrichment should be whether the pressure upon the plaintiff caused the defendant’s enrichment. Hence, in the latter context, if causation is the only relevant question, recovery should no longer be limited to pressure that is illegitimate: it is hard to see a good reason, either in principle or in practice, for holding that a plaintiff should be entitled to recover a payment made under duress, if the pressure can be characterised as illegitimate, but that the plaintiff should not be entitled to recover the payment if the pressure was of some other nature.

In both the contractual and the restitutionary contexts, the policy of remedying the impairment of a plaintiff’s autonomy would be given effect by recognising that duress is in play. On the one hand, in the law of Restitution for Unjust Enrichment, any countervailing policies, such as a defendant’s reliance interest, would be given effect by means of defences, such as change of position. Thus, in such restitutionary cases, it should be sufficient for a plaintiff to demonstrate simply that the pressure caused the enrichment. On the other hand, in the law of Contract, countervailing policies, such as a defendant’s reliance interest, or the imperative that the law ought to uphold rather than destroy apparent contracts, would be given effect by qualifying or limiting the kinds of duress which would be permitted to render the contract void. Hence, in such contractual cases, it would be necessary for a plaintiff to demonstrate that the duress was illegitimate. That adjective would give effect to the various competing policies at play in contractual cases. And, where there are no such competing policies, as where the claim is simply for restitution for unjust enrichment, there would be no need for such an adjective, and the question would simply be whether the pressure caused the enrichment.

Hence, where, in the law of Contract, a mistake would have to be fundamental, then pressure would have to be illegitimate; and the adjectives (fundamental and illegitimate) equally carry the burden of balancing the competing policies in play. And, in the law of Restitution for Unjust Enrichment, where, in the case of mistake, there is no need for an adjective like fundamental to perform such a function and the question is simply whether the mistake caused the enrichment, then, in the case of duress, there would similarly be no need for an adjective like illegitimate to perform such a function and the question would simply be whether the pressure caused the enrichment.

But, so far as the law of duress is concerned, this is not the position that the law has adopted. First, duress will render a contract voidable at law, not void (see, eg, Barton v Armstrong [1976] AC 104, [1973] UKPC 27 (5 December 1973); ACC Bank v Dillon [2012] IEHC 474 (12 November 2012) [5.0] (Charleton J)). This position is probably now too firmly fixed to be overthrown by a side wind blown in by comparisons with the law on mistake.

Second, the law came close to deciding that illegitimate pressure would be sufficient both to avoid a contract and to have restitution of an enrichment (see, eg, Universe Tankships Inc of Monrovia v International Transport Workers Federation (The Universe Sentinel) [1983] 1 AC 366, [1981] UKHL 9 (01 April 1981) (Lord Diplock); Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) (No 2) [1992] 2 AC 152 (Lord Goff)CTN Cash and Carry Ltd v Gallagher [1994] 4 All ER 714, [1993] EWCA Civ 19 (15 February 1993) (Steyn LJ) (Nicholls VC and Farquharson LJ concurring)). This is still the starting point in both contexts, and subsequent supplements to this position are set out below. But, even as the illegitimate pressure test was being developed (and supplemented) in the contractual and restitutionary contexts, there was (little to) no argument that the situations should be distinguished, that the illegitimate pressure test should be confined to the Law of Contract, and that the law of Restitution for Unjust Enrichment should be concerned with the simple question whether the pressure upon the plaintiff should have caused the enrichment of the defendant. Nevertheless, if the law had persevered simply with the illegitimate pressure test for both contractual and restitutionary claims, then, by analogy with mistake, the next step could well have been to distinguish the two, to confine the illegitimate pressure test to contractual claims, and to apply the simple question whether the pressure caused the enrichment to restitutionary claims.

Before the modern law adopted (and supplemented) the illegitimate pressure test, the old law did in fact distinguish between contractual and restitutionary claims. There was a narrow test of duress of the person in the contractual context (see, eg, Skeate v Beale (1841) 11 Ad & El 983, 113 ER 688, [1841] EngR 142 (pdf)), whilst there was a slightly wider test including duress of goods in the restitutionary context (see, eg, Astley v Reynolds (1731) 2 Strange 916, 93 ER 939, [1795] EngR 349 (pdf)). As the former was updated to the illegitimate pressure test, the distinction between contractual and restitutionary claims could – and should – have been maintained by updating the latter to apply the simple question whether the pressure caused the enrichment.

However, the law has not followed this simple path, but has instead headed in a different direction, in at least three ways. The first is that, as we have already seen, in the necessary process of updating the law, no distinction is being drawn between contractual and restitutionary claims, and the illegitimate pressure test is the starting point in both contexts (see The Universe Sentinel, The Evia Luck (No 2), and CTN above; subsequent supplements to this position are set out below). Even so, if the different policies at play are identified, then the distinction between the contractual test of illegitimate pressure and the restitutionary test of whether the pressure caused the enrichment should be recognised.

The second way in which the law has headed in a different direction from the simple path suggested above is that it has not fully dealt with the legacy of the various categories of case in which duress is historically said to have arisen. These categories include duress of the person, duress of goods, duress colore officii, economic duress, threats to prosecute or publish information, lawful act duress, and so on. In updating the law, echoes of the separation of duress by the old law into these various categories have not entirely faded away. This has unnecessarily complicated the application of the illegitimate pressure test. The logical outcome of updating the law on duress would be to recognise that the various categories are simply different sets of facts in which duress has historically arisen, rather than principled distinctions, and that there is no justification in the modern law for drawing distinctions between them. For so long as no distinction is being drawn between contractual and restitutionary claims, then the illegitimate pressure test should be applied in both contexts in all of various categories. However, if the different policies at play in the two contexts are identified, then the distinction between the contractual test of illegitimate pressure and the restitutionary test of whether the pressure caused the enrichment should be recognised. So, when a case arises in the contractual context, the illegitimate pressure test should be applied whatever the factual category of case; and, where a case arises in the restitutionary context, the test of whether the pressure caused the enrichment should be applied whatever the factual category of case.

The third way in which the law has headed in a different direction from the simple path suggested above is by maintaining the historical (but now unprincipled) distinctions between at least some of these various factual categories, and adding specific rules in the context of some of these categories. This is why, although the law came close to deciding that illegitimate pressure would be sufficient both to avoid a contract and to have restitution of an enrichment, it has not entirely committed to this position. Instead, while the illegitimate pressure test is still the starting point in both the contractual and the restitutionary contexts, the law has considered supplementing it by adding further requirements in specific categories. For example, in the context of lawful act duress, in Pakistan International Airline Corporation v Times Travel (UK) Ltd [2023] AC 101, [2021] UKSC 40 (18 August 2021) [103]-[120], Lord Burrows (dissenting on this point) considered that the illegitimate pressure test should be refined by adding the requirement that the defendant must have acted in bad faith. However, the majority rejected this refinement ([53] (Lord Hodge) (Lords Reed, Lord Lloyd-Jones and Kitchin concurring)). Again, in the context of economic duress, in Pakistan IAC v Times Travel (above) [79], Lord Burrows considered that the illegitimate pressure test should be refined by adding the requirement that the plaintiff must have had no reasonable alternative to giving in to the illegitimate pressure (and this was approved by the majority in Law Debenture Trust Corporation plc v Ukraine [2023] 2 WLR 699, [2023] UKSC 11 (15 March 2023) [144] (Lords Reed, Lloyd-Jones and Kitchen, in a joint judgment; Lord Hodge concurring)). Hence, whilst the law came very close to deciding that illegitimate pressure would be sufficient both to avoid a contract and to have restitution of an enrichment, this additional requirement of absence of reasonable alternative means that illegitimate pressure is not sufficient in the context of economic duress.

To the extent that it is sought to graft such additional requirements of a bad faith demand or the absence of a reasonable alternative onto historical factual categories of duress, this is to let history defeat logic and principle. This graft would be less problematic if either of these requirements, or indeed any other requirements that might be proposed, were to be added to the illegitimate pressure test across the board (so that no distinction would be drawn between the various factual categories in which duress is historically said to have arisen). It would be less problematic again if contractual and restitutionary claims were distinguished, and any such additional requirement were to be added to the illegitimate pressure test across the board in the contractual context but not in the restitutionary context.

However, all is not lost. Some hints that the distinction between contractual and restitutionary claims might be revived are to be found in the acknowledgment by Lord Burrows that, whilst the additional requirement of the absence of a reasonable alternative might be grafted onto the illegitimate pressure test in the context of economic duress, “the position appears to be different in respect of other forms of duress” (Pakistan IAC v Times Travel (above) [79]; approved in Law Debenture Trust v Ukraine [144]; referring to Astley v Reynolds (above)). In this concession for Astley v Reynolds, there is scope to revive the distinction between contractual and restitutionary claims. Rather than drawing the line between cases of economic duress and other historical categories of duress, the line should be drawn instead between contractual and restitutionary claims. As a consequence, the requirement of the absence of a reasonable alternative could be added to the illegitimate pressure test in the contractual context, whilst that requirement need not be applied in the restitutionary context.

If that is so, then the analogy drawn between mistake and duress with which this post began might go as follows. In the law of Contract, the type of duress that would render a contract voidable at law ought to be when the pressure is illegitimate, and the plaintiff had no reasonable alternative to giving in to it. On the other hand, where there is no contract, in a claim in Restitution for Unjust Enrichment based on duress, it now ought to be sufficient to ground recovery that the pressure is illegitimate. Moreover, whilst the old law drew distinctions that set up various factual categories of duress, there is no justification in the modern law for drawing such distinctions; the only question in the law of Contract should be whether the pressure was illegitimate and whether the plaintiff had a reasonable alternative, and the only question in the law of Restitution for Unjust Enrichment should be whether the pressure was illegitimate. In particular, therefore, in the latter context, if causation is the only relevant question, recovery should no longer be limited to pressure that is illegitimate.

In both the contractual and the restitutionary contexts, the policy of remedying the impairment of a plaintiff’s autonomy would be given effect by recognising that duress is in play. On the one hand, in the law of Restitution for Unjust Enrichment, any countervailing policies, such as a defendant’s reliance interest, would be given effect by means of defences, such as change of position. Hence, in such cases, it should be sufficient for a plaintiff to demonstrate that the pressure was illegitimate. On the other hand, in the law of Contract, countervailing policies, such as a defendant’s reliance interest, or the imperative that the law ought to uphold rather than destroy apparent contracts, would be given effect by qualifying or limiting the kinds of duress which would be permitted to render the contract voidable. Hence, in such contractual cases, it would be necessary for a plaintiff to demonstrate both that the duress was illegitimate and that the plaintiff had no reasonable alternative to giving in to it. This additional qualification of the absence of a reasonable alternative would give effect to the various competing policies at play in contractual cases. And, where there are no such competing policies, as where the claim is simply for restitution for unjust enrichment, there would no need for such a qualification, and the question would simply be whether the pressure was illegitimate.

Hence, where, in the law of Contract, to render a contract void for mistake, a mistake has to be fundamental, then to render a contract voidable for duress, the pressure would have to be illegitimate and the plaintiff must have had no reasonable alternative to giving in to it; and the adjective fundamental and the additional qualification of absence of reasonable alternative would equally carry the burden of balancing the competing policies in play. And, in the law of Restitution for Unjust Enrichment, where, in the case of mistake, there is no need for an adjective like fundamental to perform such a function and the question is simply whether the mistake caused the enrichment, then, in the case of duress, there would similarly be no need for a qualification like the absence of reasonable alternative to perform such a function, and the question would simply be whether the pressure was illegitimate. By means of a much more subtle route than that sketched here, Chang (above) arrives at a similar conclusion. This position is but a short step from that of Lord Burrows in Pakistan IAC v Times Travel (above); and, for the reasons that Chang gives, it is a step that the law should take at the first opportunity.

Moreover, once a distinction between contractual and restitutionary claims is recognised, so that the differing policies in these distinct contexts are given effect by means of different tests along the lines outlined in the previous three paragraphs, the law should take one further step. By analogy with the position in mistake, where a fundamental mistake will render a contract void at law and a mistake that causes an enrichment will justify restitution for unjust enrichment, so, in the context of duress, illegitimate pressure should render a contract voidable at law and pressure that causes the enrichment should justify restitution for unjust enrichment. In the law of Contract, where a mistake is fundamental and pressure is illegitimate, the adjectives (fundamental and illegitimate) would each equally carry the burden of balancing the competing policies in play. In the law of Restitution for Unjust Enrichment, there should be no need for an adjective like fundamental or illegitimate to perform such a function, and the question should simply be whether the mistake or pressure caused the enrichment. Hence, so far as the law of duress is concerned, in both the contractual and the restitutionary contexts, the policy of remedying the impairment of a plaintiff’s autonomy would be given effect by recognising that duress is in play. On the one hand, in the law of Restitution for Unjust Enrichment, any countervailing policies, such as a defendant’s reliance interest, would be given effect by means of defences, such as change of position. Thus, in such restitutionary cases, it should be sufficient for a plaintiff to demonstrate simply that the pressure caused the enrichment. On the other hand, in the law of Contract, countervailing policies, such as a defendant’s reliance interest, or the imperative that the law ought to uphold rather than destroy apparent contracts, would be given effect by qualifying or limiting the kinds of duress which would be permitted to render the contract voidable. Thus, in such contractual cases, it would be necessary for a plaintiff to demonstrate that the duress was illegitimate. That adjective would give effect to the various competing policies at play in contractual cases. And, where there are no such competing policies, as where the claim is simply for restitution for unjust enrichment, there would be no need for such an adjective, and the question would simply be whether the pressure caused the enrichment.

This position is a step further along the road than that advocated by Chang, and it two steps away from that of Lord Burrows in Pakistan IAC v Times Travel (above). However, for the reasons set out above, the law should take both of these steps at the first opportunity. In this way, the law on duress in Contract and Restitution for Unjust Enrichment can learn lessons from the law on mistake in both contexts. For the sake of the principled exposition of the law, the sooner that is done, the better.