Opel GmbH v Mitras Automotive Ltd [2007] EWHC 3205 (QB)

Facts

• Adam Opel GmbH contracted with Mitras Automotive Ltd for the supply of a specific automotive part.
• Opel sought early termination of the contract due to changes in manufacturing plans.
• Mitras demanded compensation for the remaining contract term, asserting their costs were dependent on the original contract duration.
• Mitras threatened to stop supplying the parts unless Opel agreed to the compensation, risking major disruptions to Opel’s production.
• Mitras was the sole supplier, leaving Opel with no practical alternative to maintain production.
• Opel agreed to the compensation demands and made the relevant payments to avoid interruption.

Issues

1. Whether Mitras Automotive Ltd's threat to cease supply amounted to illegitimate pressure constituting economic duress.
2. Whether Opel had any practical alternatives or reasonable options in response to Mitras’s threat.
3. Whether the continued supply by Mitras represented sufficient contractual consideration to preclude a finding of duress.
4. Whether the agreement entered in these circumstances was voidable at Opel’s option.

Decision

• The court found that Mitras's threat to stop supplying parts was illegitimate pressure and not a permissible commercial tactic.
• Opel lacked practical alternatives, given Mitras’s sole supplier status, and seeking an injunction was not a viable option.
• Although Mitras’s continued supply was valid consideration, the court held that consideration did not negate economic duress.
• The agreement was declared voidable, permitting Opel to rescind the contract and recover the payments made under duress.

Legal Principles

• Economic duress arises where illegitimate pressure negates genuine contractual consent, making an agreement voidable.
• The key criteria include illegitimate threat, lack of practical choice, and a causal link between threat and agreement.
• The presence of contractual consideration does not prevent a finding of duress if that consideration is secured through coercion.
• Business sophistication or size does not preclude protection from economic duress; courts will scrutinize imbalances of power and limited alternatives.
• The judgment followed principles established in cases such as DSND Subsea Ltd v Petroleum Geo Services ASA and Williams v Roffey.

Conclusion

The court concluded that Mitras Automotive’s exploitation of its position as sole supplier amounted to economic duress, rendering the agreement with Opel voidable despite the existence of consideration. This case reinforces that contracts procured by illegitimate pressure, even in commercial settings with sophisticated parties, will not be upheld by the courts.