| Pao On v Lau Yiu Long | |
| Court: | Privy Council |
| Date Decided: | 9 April 1979 |
| Full Name: | Pao On and others v. Lau Yiu Long and another |
| Citations: | [1979] UKPC 17, [1980] AC 614, [1979] HKLR 225 |
| Judges: | Lord Wilberforce |
| Opinions: | Lord Scarman |
| Keywords: | Consideration, economic duress, commercial pressure |
Pao On v Lau Yiu Long [1979] UKPC 17 is a contract law appeal case from the Court of Appeal of Hong Kong decided by the Judicial Committee of the Privy Council, concerning consideration and duress. It is relevant for English contract law.
Fu Chip Investment Co. Ltd., a newly formed public company, majority owned by Lau Yiu Long and his younger brother Benjamin (the defendants), wished to buy a 21-storey building then under construction called the "Wing On building",[1]
Lord Scarman, giving the Privy Council’s advice, first disposed of the question about past consideration, because a promise to perform a pre-existing contractual obligation to a third party can sometimes be good consideration.[1] The question of whether consideration can be invalidated ‘if there has been a threat to repudiate a pre-existing contractual obligation or an unfair use of a dominating bargaining position’ was rejected because ‘where businessmen are negotiating at arm’s length it is unnecessary for the achievement of justice’. On the idea of past consideration, Lord Scarman said this:
On the point of duress, Lord Scarman held the following.[2]
This was commercial pressure and no more, since the company really just wanted to avoid adverse publicity. For a general doctrine of economic duress, it must be shown ‘the victim’s consent to the contract was not a voluntary act on his part… provided always that the basis of such recognition is that it must amount to a coercion of will, which vitiates consent.’
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