Pakistan International Airline Corporation Vs Times Travel Sample LTD
Introduction
The objective of the report is to illustrate the economic duress act by analyzing the case between Pakistan International Corporation Vs Time Travel. The report describes important facts of the case. Besides, the laws regarding economic duress are also discussed in the paper to better understand how the economic duress act is taken into consideration. The judges’ verdict will be discussed in the paper to realize the reason for a better understanding of the settlement process undertaken in the case.
Facts
Time Travel is a travel agency that sells tickets on behalf of the “Pakistan Airline International Corporation”(PIAC). PIAC denied giving commission to its travel agents, and it created conflict between the parties and Time Travel claimed for the commission and started legal proceedings (Cook, 2020). As a result, the PIAC authority reduces the ticket allocation to the Time Travel agency from 300 to 60 tickets.
In addition, the authority gave notice to its agents that the authority can terminate any agency whenever they think fit, and this provision existed previously in the contractual deeds. Next time PIAC gave assurance to the Time Travel authority that they would increase the ticket allocation, and both the parties gave assent to the new terms (Supreme court. the UK, 2021). Time Travel argues that they had no alternative way except consent to the new terms.
The court gives the verdict that it is a contract of economic duress, which binds the other party to give consent to the contract. In this situation, the victim must give assent to the contractual deeds, and there is no alternative option (Murugan, 2020).
However, the court verdict that the PIAC’s termination procedure was not made in bad faith and the economic coercion has been made without any bad intention. Lord Hodge has dismissed the appeal of Time Travel, and he gave examples of two economic duress cases as a supportive argument. In the first case, other members for procuring an agreement cheat one member.
In the second case, the victim was forced to make an agreement and waive his claim. The judges considered that the agreement was made with good faith. Maximum judges deny that PIAC never forced any travel agency to assent to the agreement, and all the agencies signed the agreement after seeing the agreement deeds (Gardner, 2019).
Hence, they gave the verdict that PIAC fulfilled all the agreed criteria and provided all the legal terms and conditions to the Time Travel agency. The Supreme Court of England repealed the appeal of TT, and all the judges such as Lord Kitchin, Lord Reed and Lord Lloyd-Jones agreed with the conduct of PIAC.
Law
The “Laws of Economic Duress” are applicable in that case when one party is forced to give consent to the contract by another party. Economic duress law is applicable to protect the victim from financial damage. Economic damage can be caused due to excessive pressure from the defendant party. Time Travel agency gets a commission from the PIAC authority regarding ticket selling (Rahman, 2019).
As per TT, it has an unpaid commission of £1.5m from PIAC. TT made a new contract for getting the unpaid commission from PIAC as PIAC had threatened TT to terminate the organisation. Due to termination threatening and reduction of ticket allocation, TT has claimed for violating the contractual relationship.
According to the law, for claiming in economic duration, there needs to be a threat from the other party, which is illegitimate (Supreme court.UK, 2021. Due to this threat, the parties are bound to enter into the new contract. Finally, the victim party has no alternative way to give up the agreement and join the new contract. Both parties must fulfill such criteria to get the advantage of economic duress laws (Pieterse, 2019).
Hence, the keywords of the law are an illegitimate threat bound to the party. As per the order of Lord Burrows and Lord Hodge, the victim gets a threat, and he accepts the new terms as the claimant has no way to forgive it. For this reason, the case is considered illegitimate instead of an unlawful act. The judges ordered that there was no pressure created from the PIAC authority, and for this reason, it is not considered economic duress.
There were absences of a general principle that helped the PIA to get an advantage in the judgment (Supreme court. the UK, 2021). Lord Burrows gave the same judgment, and he ordered that TT’s appeal has no value as PIAC has completed the agreement with good faith and is contrary to the illegitimate word of the economic duress law. Only the law is applicable for the bad faith of the defendant party. Additionally, Lord Burrow explained that it is not made for the commercial interest of the PIAC, and TT has read all the relevant rules and regulations during the signing of the contract.
Legal questions and the court’s decision
The parties to claim Economic duress should follow three questions:
- Is there an illegitimate pressure created by the defendant party?
- Is the claimant entering into the new contract because of the threat?
- Had the claimant any alternative way to leave the agreement?
Based on the three questions Lord Hodges gave a verdict, and he considered only two circumstances for illegitimate threat and pressure. The exploitation of the claimant is conducted by criminal activity. Besides, the defendant gets the opportunity of claimant’s weakness.
The judge explained that it needs to induce the other party with a bad intention, and the claimant has signed the new contract due to the influence (Loots and Charrett, 2019). On the other hand, Lord Hodge found it difficult to resolve the conflict, and he claimed that such a situation had not taken place in the commercial negotiations.
Commercial negotiations are made between the parties with a clear agreement, and both parties get to benefit from it. He added that it has a higher chance to manipulate the weak party and the strong party to get the advantage of the agreement. It bound the party so that he had no other option to leave out from it (Supreme court. the UK, 2021).
In addition to that, the exploitation of one party bound him to make a new contract. Such a case increases the bargaining power of a strong party to a weak party.
Similarly, there was an omission of general duty in English law for influencing the parties in such a way (Viehoff, 2021). This kind of pressure from one party to the other is illegitimate in that position when it contains the “unconscionability”. Lord Hodge from the “Doctrine of Influence” borrows the word unconscionability.
He gave two examples of historical cases for describing illegitimacy. After analysing all the factors, the judge asserted that it was not under the law of economic duress. Hence, PIAC has conducted a legitimate agreement with Time Travel.
In the same case, Lord Burrow gave different opinions from Lord Hodges. He said that when a situation takes place to waive a claim against the weak party, it automatically comes under the economic duress laws. In this case, PIAC intentionally made such an agreement with TT and violated the rule of law. He considered it a crime as it affects the sustainability of TT in future.
When the agreement increases the vulnerability of the other party, then it is a violation of the law. The PIAC authority did not believe that SPIC had a defence for the claim or waived it (Supreme court. the UK, 2021). PIAC has expressed their views that in the agreement deeds, they make such provision regarding the commission payment. Hence, the claim of TT is completely repealed (McGaughey, 2021). There is no evidence that PIAC had manipulated TT in the wrongly way. However, PIAC gave a notice that Time Travel will be terminated from the contractual deeds at the end of October.
However, on September 17, it terminated the contract fortnightly and reduced the ticket allocation. Finally, they give the TT to either accept the new offer or leave for the agreement. PIAC added that in case the organization accept a new contract, then the ticket allocation will be raised; otherwise, TT will not get support from this organization. The time travel agency has claimed that PIAC is are creating a monopoly situation in the business and controlling other organizations (Khan et al. 2019).
On the other hand, there is no proof for the PIAC of bad faith. Although TT has claimed against PIAC for economic duress, it was cancelled by England’s supreme court. There are difficulties in giving evidence of bad faith and unreasonable demands, and TT has appealed in the court for justice regarding commission payment.
Conclusion
From the above discussion, it can be concluded that the conflict between PIAC and Time Travel is related to economic duress. However, the judges have given different verdicts regarding the conflict, and the Supreme Court repealed the appeal. As per the court order, before alleging any person (in economic duress), the situation must follow three criteria. In this case, not all three conditions are fulfilled, so the court cancels the appeal of TT.
Reference
Cook, D.J., 2020. New Dog, Old Tricks: Lawful Act Duress in Times Travel (UK) Ltd v Pakistan International Airlines Corporation. Old Tricks: Lawful Act Duress in Times Travel (UK) Ltd v Pakistan International Airlines Corporation (January 13, 2020).
Gardner, J., 2019. Does Lawful Act Duress Still Exist?. The Cambridge Law Journal, 78(3), pp.496-499.
Khan, M., Bae, J.H., Choi, S.B. and Han, N.H., 2019. Good faith principles in Islamic contract law: a comparative study with Western contract law. Journal of International Trade & Commerce, 15(6), pp.143-159.
Loots, P. and Charrett, D., 2019. Economic duress 1. In The Application of Contracts in Developing Offshore Oil and Gas Projects (pp. 232-248). Informa Law from Routledge.
McGaughey, E., 2021. Competition and labour law in the United Kingdom: history, theory and practice. The Cambridge Handbook of Labour in Competition Law (Cambridge University Press 2022).
Murugan, S.B., 2020. Economic duress: Present state and future development in England, Australia and Malaysia. In The Future of the Law of Contract (pp. 185-216). Informa Law from Routledge.
Pieterse, R., 2019. A Comparison of Economic Duress and Economic Disparity of Contracting Parties. University of Johannesburg (South Africa).
Rahman, M.H., 2019. Economic Duress in Contract: Can a Lawful Pressure Become an Illegitimate Threat?. Available at SSRN 3841165.
Supremecourt.uk, 2021. Pakistan International Airline Corporation (Respondent) v Times Travel (UK) Ltd (Appellant) – The Supreme Court. [online] Supremecourt.uk. Available at: <https://www.supremecourt.uk/cases/uksc-2019-0142.html> [Accessed 1 December 2021].
Niehoff, J., 2021. Solidarity under duress: Defending state vigilantism. European Journal of Philosophy.
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