Carillion Construction Ltd v Felix (Ltd) [2001] BLR 1

Contract - Economic duress - Settlement - Sub-contractors

Facts:

Carillion was a main contractor on a building site and subcontracted Felix to undertake work. The work was due for completion in January 2000 but Felix breached this obligation and estimated delivery by April 2000. Felix told Carillion that the completion of the work was dependent on payment of their account, which was several hundred thousand over what had been agreed. Felix threatened not to complete the works without payment of their account, although Carillion had disputed the amount and stated that such terms amounted to duress although made the payment. After all the works were completed, Carillion brought action claiming duress.

Issues:

Whether a threat to cease work unless an early settlement of an account that was over the agreed amount constituted duress.

Held:

The appeal by Carillion was allowed. The court held that for an agreement to rescind on grounds of duress, it must be proven that illegitimate pressure had been applied compelling Carillion to make the payment. DSND Subsea Ltd v Petroleum Geo Services ASA [2000] B.L.R. 530 was distinguished as there was no conduct or breach of the agreement that warranted DSND to issue a notice of termination, whereas in the present case, Felix told Carillion that the work would cease if their account was not settled before the completion of the works. This was a threat to breach the contract. They had already breached the contract by failing to meet the deadline for the completion of the works. The account was over what was agreed and was only paid by Carillion for fear that the works would not be completed before the final deadline in June 2000. The pressure applied was illegitimate and amounted to duress.