## Facts

- CTN Cash and Carry Ltd ordered cigarettes from Gallaher Ltd.
- Gallaher mistakenly delivered the cigarettes to the wrong warehouse, resulting in the cigarettes being stolen.
- Gallaher, under the belief that the risk of loss had passed to CTN, insisted on payment for the stolen goods.
- Gallaher threatened to withdraw CTN's credit facilities if payment was not made.
- CTN, dependent on these credit facilities, paid under protest and later sought to recover the sum.

## Issues

1. Whether Gallaher’s threat to withdraw credit facilities constituted duress.
2. Whether the payment made under protest could be recovered on the grounds of lawful act duress.
3. Where the boundary lies between legitimate commercial pressure and illegitimate commercial coercion in contract law.

## Decision

- The Court of Appeal held that Gallaher’s threat to withdraw credit facilities did not amount to duress.
- The court recognized that Gallaher genuinely believed it was entitled to payment, even if mistaken.
- The actions taken by Gallaher were within the scope of acceptable commercial pressure and not illegitimate.
- The payment made by CTN could not be recovered, as the contract was not entered into under unlawful or illegitimate duress.

## Legal Principles

- Lawful act duress requires not merely pressure but an illegitimate threat, even if the threatened act is otherwise lawful.
- A bona fide belief in entitlement to payment weighs against a finding of duress, even if that belief is mistaken.
- Commercial pressure, including leveraging bargaining power and enforcing credit terms, is not duress unless the pressure is illegitimate.
- Demands and threats falling within recognized commercial practices do not invalidate contracts; the mere existence of commercial bargaining does not cross into duress absent bad faith or exploitation.

## Conclusion

The case confirms that legitimate commercial pressure, including robust negotiation tactics that use lawful means such as altering credit terms, does not constitute duress unless the pressure is illegitimate. Courts will uphold contracts formed under such commercial circumstances, reinforcing the principle of freedom of contract and offering guidance on the limited scope of lawful act duress in commercial transactions.


CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 (CA)