Opel v Mitras Automotive (UK) Ltd [2008] EWHC 3205 (QB)

Key point

  • A threat to cease supplies from a supplier resulting in large financial losses amounts to economic duress

Facts

  • Mitras (D), was a supplier to a joint venture between Opel and Renault (Cs)
  • Cs gave notice for early termination of the supply contract in 6 months and in response D threatened to terminate its supply immediately, which would lead to large losses for Cs
  • The parties entered into compromise agreement where D would be compensated for the amount it wanted for early termination
  • An application for injunction without notice to the defendant was sought to compel D into performing, but this was rejected by the judge – Cs would have to apply for an injunction with notice to D but they feared notice might prompt D into immediate discontinuance
  • Cs sued to rescind the contract for duress

Issues

  • Was there duress? Was the promise to continue a contractual relation adequate consideration?

Held (Queen’s Bench Division)

  • Judgement for C

Donaldson QC

Illegitimate pressure

  • ‘Given GMR’s legitimate concern to ensure security of supply, I do not in these circumstances consider that the injunction route was an alternative adequate to nullify the pressure created by Mitras’ threat.’ [33]
  • ‘Pulling the threads together, I am satisfied that Mitras threatened to stop supplies, and that the pressure created by this threat caused GMR to conclude the agreement of 15 March 2006 and make the payments thereunder which they now seek to recover. My consideration and evaluation of the matters analysed above has also led me to conclude that the pressure was illegitimate. In these circumstances, GMR are entitled to a declaration that the agreement was voidable and has been avoided and to the recovery of the monies paid out by reason of that agreement.’ [37]

Consideration

  • D’s promise to continue supply did amount to adequate consideration, as per Williams v Roffey [1991] 1 QB 1
  • Therefore, C couldn’t rely on the absence of consideration as an alternative or addition to duress