• In the case of DSND Subsea ltd v Petroleum Geo Services ASA 2000 build lr 530, it was held that when a demand for contractual variation was made in good faith, it makes it less likely to amount to economic duress.

Facts of the Case

  • In an action relating to a contract between D and P for subsea work, P submitted that it had entered into a memorandum of understanding varying the main contract following a misrepresentation by D; the memorandum of understanding had been entered into through economic duress, and it had validly terminated the main contract for breach in accordance with its terms.

Issues in DSND Subsea ltd v Petroleum Geo Services ASA 2000 build lr 530

  • What could amount to economic duress

Held by High Court

  • Contract not voidable

Dyson J

  • It was held that the representation had not been relied on, was not false and had been affirmed. There was no evidence of duress nor any breach of contract to warrant service of the notice of termination of the main contract.
  • “PGS have alleged a number of such breaches of contract. I have only referred to two of them, namely the failure to have a DSV present from 10 November, and the failure to have a DSV present to witness the water injection test on 16/17 November. I do not find it necessary to deal with the other allegations, which were subsidiary to the two main complaints, and which were not developed in argument. In my view, since PGS expressly relied on the failure to have a DSV present at the field from 10 November in its letter of termination, that is the only breach on which it can rely in justification of the termination. It does not seem to be disputed that a valid notice of termination under Article 16.1 must identify the “situation” relied on by PGS. The notice cannot simply purport to terminate the contract without stating the ground relied on. That ground may be a breach of contract by DSND, it may be bankruptcy or similar proceedings commenced against DSND (Article 16.1.4), or it may even be “consistent default by DSND with respect to timely payment to subcontractors and others in respect of the Work” (Article 16.1.5). Thus it was that, quite correctly, PGS identified the breach of contract relied on with some precision. It cannot have been intended by the parties that the notice of termination should be expressed to be based on one ground, but that PGS could subsequently assert a quite different ground in justification of its notice.” [193]