CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714
Facts
(C) a company which ran a cash and carry warehouse, bought cigarettes in bulk from G, who delivered them by mistake to the wrong address. Before the goods could be redelivered, they were stolen. G invoiced C for the goods, believing that the risk in the property had passed to C and then threated to cut of C’s credit facilities if it did not pay. C did pay but later brought an action claiming repayment on the grounds that it had paid because of economic duress. This was dismissed
Legal Issue
Whether the supplier’s lawful threat to withdraw future credit amounted to economic duress, allowing recovery of the payment made to meet its disputed demand.
Held
The Court of Appeal dismissed CTN’s claim to recover the payment for economic duress. The supplier had delivered cigarettes to the wrong address, after which they were stolen, but genuinely believed that risk had passed and payment was due. It threatened to withdraw a credit facility it was legally entitled to withdraw. In this arm’s-length commercial setting, those facts did not make the pressure illegitimate. The court did not resolve every possible basis on which the disputed payment might be recoverable; the appeal concerned duress. Nor should its refusal to extend liability on these facts be converted into an absolute denial of any lawful-act duress, a subject addressed by later authority.
⭐ Legal Principle
A lawful commercial threat made in support of a genuinely believed entitlement did not constitute economic duress in CTN. The decision is fact-sensitive and does not exclude the narrow doctrine of lawful-act duress recognised in later authority.
Significance
CTN concerns commercial pressure through threatened lawful withdrawal of credit and a genuine belief that payment was due. It distinguishes a tough demand from pressure that vitiates consent through economic duress. The later decision in Times Travel confirms that lawful-act economic duress has a narrow potential operation, so CTN should not be turned into a universal exclusion. An examination answer should identify the alleged illegitimacy and the particular conduct, rather than assuming that commercial strength alone establishes duress or that lawful conduct can never do so.
Common exam questions about this case
Why did the threatened withdrawal of credit not establish duress?
The supplier was entitled to withdraw the credit facility and genuinely believed the disputed invoice was payable. In an arm’s-length commercial relationship, using that leverage did not make the demand illegitimate on these facts. The buyer’s commercial difficulty in refusing was insufficient by itself to establish economic duress.
Was the supplier’s good-faith belief relevant?
Yes. The court stressed that the supplier honestly considered itself owed the money and was pressing that perceived entitlement. That feature helped distinguish the demand from an illegitimate extraction of a benefit. The case was decided on those circumstances, not on a general finding that all pressure to settle disputed debts is lawful.
Does CTN exclude lawful-act duress altogether?
No. Such a reading is too broad, particularly after Times Travel. English law recognises a narrow category of lawful-act economic duress, while rejecting a general doctrine based simply on inequality of bargaining power. CTN remains an example where a lawful commercial threat made in good faith did not cross the threshold.