Pao case relevance in Contract law PDF

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Pao case relevance in Contract law...

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Pao On v Lau Yiu Long The two main topics that you could take from this case are: - past consideration - duress Past consideration: Past consideration (i.e. consideration that is normally not sufficient for a valid contract to be formed) can still be good consideration if the following three criteria are met: 1. The act constituting the consideration must be done at the request of the promisor. 2. There must have been an understanding that the act would be remunerated. 3. The promise must have been legally enforceable had it been promised in advance of the act. Duress: These four factors could be used to consider in assessing whether economic duress was present: 1. Did the person claiming to be coerced protest? 2. Did that person have any other available course of action? 3. Were they independently advised? 4. After entering into the contract, did they take steps to avoid it? In Pao On it was applied this way: the defendant did not protest at the time. He could also have enforced the contract of sale through specific performance and thus had another avenue of redress available to him. He had taken legal advice and took no steps to avoid the agreement prior to the claimant seeking to enforce the guarantee. Therefore, no economic duress could be established. It was simply commercial pressure (far short of duress!), since the company really just wanted to avoid adverse publicity....