Settlement agreement – economic duress, misrepresentation or unconscionable conduct

Allens Arthur Robinson

Mitchell v Pacific Dawn Pty Ltd [2011] QCA 98

The Queensland Court of Appeal has affirmed that a threatened breach of contract may amount to normal commercial negotiations if the party exerting the pressure does so in good faith and on a reasonable and honest view of its legal rights. On the facts, the Court found that a settlement agreement was not the result of economic duress, unconscionable conduct, or misrepresentation. Though the builder had claimed that the principal had concealed its inability to make payments, had wrongly asserted a right to delay costs (despite having caused substantial delays), and threatened to breach the contract, the builder actually knew the principal was financially stretched, and that the principal’s delay claim views were legitimate in the circumstances.

Reproduced with permission of Allens Arthur Robinson and in accordance with their terms of use.

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