North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705<\/strong><\/p>\n Duress; contract validity; economic pressure<\/p>\n Shipbuilders Hyundai Construction (HC) agreed to build a tanker for North Ocean Shipping (NOS) for a fixed price, which was to be paid in five instalments, in US dollars. HC opened a letter of credit as security repayment of instalments in the event of default. After the first instalment was paid, the US dollar\u2019s value went down by 10%, so HC claimed a 10% increase in the building price in response. NOS rejected the claim and paid the following two instalments based on the original price. HC returned these payments. HC also rejected the idea of arbitration and gave an ultimatum to NOS \u2013 they either accept HC\u2019s demand for a 10% price increase or HC will terminate their contract.<\/p>\n At the time of the dispute, NOS was close to reaching a lucrative agreement regarding the tanker\u2019s chartering, so to avoid losing this deal, NOS agreed to the increase \u201cwithout prejudice\u201d to their rights. HC, in turn, agreed to increase the letter of credit. NOS started a claim for the return of the 10% increase a year after the tanker\u2019s delivery on grounds of economic duress.<\/p>\n The Court found in favour of HC. HC\u2019s increase of the letter of credit served as consideration for NOS\u2019s increased payments under the original contract. While HC\u2019s demand for a 10% price increase did amount to economic presure and made the original contract voidable, NOS\u2019s payments without protest affirmed the contract. NOS\u2019s claim based on economic duress thus had to fail.<\/p>\n","protected":false},"excerpt":{"rendered":" Duress; contract validity; economic pressure. Shipbuilders Hyundai Construction (HC) agreed to build a tanker for North Ocean Shipping (NOS) for a fixed price, which was to be paid in five instalments, in US dollars. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[85],"class_list":["post-5860","post","type-post","status-publish","format-standard","hentry","category-cases","tag-uk-law"],"yoast_head":"\nFacts<\/h3>\n
Issues<\/h3>\n
Decision\/Outcome<\/h3>\n