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Ctn Cash And Carry Ltd V. Gallaher Notes

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CTN CASH

AND

CARRY LTD V. GALLAHER

FACTS The plaintiff company ran a cash and carry business from warehouses in six towns in the north of England. A feature of the business was the sale of cigarettes, which they purchased in consignments from the defendant distributors. The defendants were not contractually bound to sell cigarettes to the plaintiffs and each sale was under a separate contract on the defendants' standard terms of business. The defendants had also arranged credit facilities for the plaintiffs, which they had absolute discretion to withdraw. In November 1986 the manager of one of the plaintiffs' warehouses placed an order for a consignment of cigarettes at a price of PS17,000. By mistake, the defendants delivered the goods to the wrong warehouse. The parties subsequently agreed that the defendants would arrange for the transfer of the goods to the warehouse which had placed the original order, but before that could happen the entire consignment of cigarettes was stolen from the plaintiffs' premises. The defendants, believing that the goods had been at the plaintiffs' risk at the time of the theft, invoiced them for the price of the stolen goods. The plaintiffs initially rejected the invoice, but later paid it after the defendants had made it clear that unless they did so their credit facilities would be withdrawn. Note: The defendants were apparently the sole distributors in England of popular brands such as Silk Cut and Benson & Hedges. HOLDING Same test of duress applies to avoiding a contract: It seems to me not to matter whether the correct analysis of the facts is that an agreement was made that the plaintiffs would pay the sum in question or whether payment is to be regarded simply as a unilateral act of the plaintiffs. In either event the claim must succeed if the case of duress is made out; if that case is not made out, the claim must fail. Monopoly Position: The dispute arises out of arm's length commercial dealings between two trading companies. It is true that the defendants were the sole distributors of the popular brands of cigarettes. In a sense the defendants were in a monopoly position. The control of monopolies is, however, a matter for Parliament. Moreover, the common law does not recognise the doctrine of inequality of bargaining power in commercial dealings (see National Westminster Bank plc v Morgan [1985] 1 All ER 821,
[1985] AC 686). The fact that the defendants were in a monopoly position cannot therefore by itself convert what is not otherwise duress into duress.

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