Economic duress and exercising contractual rights

Times Travel v Pakistan International Airlines (Court of Appeal) [2019]

This case provides an interesting contrast to the Bates case we featured in June albeit that no cross reference is made to the Bates judgment and none of the arguments raised in Bates were used here. Instead, on facts which have a significant overlap on a number of key points, the arguments centred upon whether the excise of a contractual right of termination could amount to economic duress


Times Travel was a ticketing agency whose business was almost entirely based on sales of tickets for PIA. PIA got into a dispute with Times Travel (and other ticketing agencies) over unpaid commission and as a result terminated its contract with Times Travel (and a substantial number of other agents) in accordance with its terms, offering a new contract in its place on less favourable terms. Crucially the new contract contained a waiver of any claim for historic unpaid commission.

Times Travel, after signing the new contract, argued that it was still entitled to the unpaid commission because the new contract had been entered into by it under duress.


The High Court held that although PIA’s actions were lawful (in that they had simply exercised a right of termination on notice without cause as per the terms of the contract), they had exercised “illegitimate pressure” – if Times Travel didn’t take the new contract it would have gone out of business.

The Court of Appeal disagreed, holding that the new contract was binding including the waiver of the unpaid commission. The important point which the Court of Appeal stressed was that PIA had acted perfectly lawfully.

The judge in the Court of Appeal said “My conclusion on the central legal issue is that the doctrine of lawful act duress does not extend to the use of lawful pressure to achieve a result to which the person exercising pressure believes in good faith it is entitled, and that is so whether or not, objectively speaking, it has reasonable grounds for that belief”. He went on to say “the common law has always rejected the use, or abuse, of a monopoly position as a ground for setting aside a contract”. In this sense the Court of Appeal was echoing the Bates’ judgment when it held that “an imbalance of bargaining power is not relevant” as to whether a contract is a relational one [or not].

Points to Note:

In many ways the decision is entirely unsurprising, at least under more traditional common law doctrines. The courts have previously made it clear that exercising a pure contractual right such as a right to terminate simply on notice is not something which is subject to any kind of requirement to balance the interests of the parties or subject to any good faith type obligation. However, PIA were, in terms of the background to their relationship with Times Travel, in a position which had many echoes of the relationship between the Post Office and their sub-postmasters which was the subject of the Bates’ case.

back to archive