Medscheme Holdings (Pty) Limited v Bamjee : the concept of economic duress

Abstract

The concept of economic duress was recently considered for the first time in depth by the Supreme Court of Appeal in Medscheme Holdings (Pty) Limited & Another v Bhamjee (as yet unreported) SCA Case 214/04 (judgment of Nugent JA handed down on 27 May 2005). The concept of duress in general was explained by the Supreme Court of Appeal as follows: ‘in general terms, an undertaking that is extracted by an unlawful or unconscionable threat of some considerable harm, is voidable’ (para 6). Since the harm threatened in Medscheme was economic harm, the Supreme Court of Appeal had to consider whether a threat of economic harm could ever amount to duress in our law. Economic duress (or business compulsion) may broadly be described as imposition, oppression or taking undue advantage of the business or financial stress or extreme necessity or weakness of another (Lafayette Dramatic Productions Inc v Ferentz 9 NW 2d 57 (1943); Hackley v Headley 8 NW 511 (1881)). To put it differently, economic duress is constituted by illegitimate commercial pressure exerted on a party to a contract, which induces him to enter into the contract, and which amounts to a coercion of the will which vitiates his consent (see Occidental Worldwide Investment Corporation v Skibs A/S Avanti [1976] 1 Lloyds Rep 293 at 335; North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] AC 704; Pao On v Lau Yiu Long [1980] AC 614 at 635–6; Universe Tankships Inc of Monrovia v International Transport Workers’ Federation [1982] 2 All ER 67 (HL) at 75–6, 88–9; Alec Lobb (Garages) Ltd v Total Oil GB Ltd [1983] 1 All ER 944 (Ch) at 960).