Duress by Threatened Breach of Contract, Slides of Law

Download Duress by Threatened Breach of Contract and more Slides Law in PDF only on Docsity! Duress by Threatened Breach of Contract R. J. Sutton * 1. Introduction If two people have made a contract and one wishes to change its terms, what may he do to persuade the other to agree? May he re-open the negotiations afresh? May he refuse to perform the con- tract until the change he desires is made? If contract rights are to be effectively protected, some legal control must be exercised over the undue use of pressure. The extent of this control, as it is found in the common law, is the subject of the present study. The policy against such pressure has traditionally been expressed in the law of consideration. If, in return for the contract modifica- tion, the party seeking it gives no more than the promise to perform the duty he already owes under the contract, the modification will not be supported by consideration and is usually invalid. This is the "pre-existing duty" rule, which can only be justified in modem times as a means of preventing extortion by threatened breach of duty.' The need for this protection recently was illustrated by an English case where one party refused to perform his contract in highly coercive and unjustified circumstances. 2 Such a policy cannot be implemented through the law of consi- deration alone. The "pre-existing duty" rule may operate arbitrarily, supporting extortive contracts where there is technical consideration. It may strike down reasonable modifications designed to make workable contracts which have unexpectedly become unsuitable. Only in a minority of American jurisdictions is there any effort to * Senior Lecturer in Law, University of Auckland, New Zealand. The writer's interest in this topic began with research undertaken at the Harvard Law School, and he had the benefit of the comments of Professor J. P. Dawson and Dr Gareth Jones, of Cambridge, on his earlier efforts. He also thanks the Oxford Law Faculty for the use of its library facilities for the present research and Mr F. M. B. Reynolds for helpful textual comments on the final draft of this article. ' See Goodhart, Performance of an Existing Duty as Consideration, (1956) 72 L.Q.R. 490. 2 D. & C. Builders v. Rees, [1966] 2 Q.B. 617, [1965] 3 All E.R. 837 (CA.); Winder, The Equitable Doctrine of Pressure, (1966) 82 L.Q.R. 165 and Cornish, Economic Duress, (1966) 29 M.L.R. 428. THREATENED BREACH OF CONTRACT deal with such a modification on its general merits And what if the rule does apply? The transaction may be invalid, but remedial problems which follow are apparently left unsolved. It is hardly surprising that courts in the twentieth century are exploring other forms of protection. This article will examine the potential contribution of the law of "duress". Duress is defined in this way in the Restatement of Contracts: ... any wrongful threat of one person by words or other conduct that induces another to enter into a transaction under the influence of such fear as precludes him from exercising free will and judgment if the threat was intended or should reasonably have been expected to operate as an inducement The definition is applicable to most legal rules, including "compul- sion" or "extortion", although the precise meanings of the terms used, especially "wrongful" and "free will", may differ from one rule to another. It is helpful because it identifies three important elements of duress. The first is the threat which is employed. The system of classi- fication in most judicial and textual treatments of duress depends upon what kind of a threat it is. As far as duress by threatened breach of contract is concerned, there are a number of Common- wealth decisions which can broadly be classified under that head. There is a much greater body of American case law from which examples may be drawn to assist in the understanding of Common- wealth cases. Secondly, there is the interference with "freedom of will". Generally the courts will insist upon this. Otherwise, they could not stop short of a broad jurisdictioi to investigate the merits of all consensual transactions. The required degree of coercion, however, may vary. Take; for example, a man who is faced with bankruptcy, and a man who has to walk to the next shop to get what he wants. Both may be said to "act against their will" if they decide to submit to the threat. The courts may be expected to discriminate, requiring a higher degree of coercion to be proved where the attacked trans- 3 E.g. King v. Duluth, M. & N. Ry., 61 Minn. 482, 63 N.W. 1105 (1895). See 1A Corbin on Contracts (1963), paras. 183-4; 1 Williston on Contracts 3d ed. (1957), 541-2, para. 130A; Annot., 12 A.L.R. (2d) 80 (1950). 4 American Law Institute, 2 Restatement of the Law of Contracts (1932), 938, para. 492(b) (Restatement of Contracts). This article is not concerned with the more extreme form of duress specified in, para. 492(a). 5 For discussions of "freedom of will", see Dalzell, Duress by Economic Pressure, (1942) 20 N.C.L.R. 237, 239 and articles there cited. 1974] McGILL LAW JOURNAL so terrorized its victim that he could not resist.21 On the whole however the doctrine appears to be a primitive rule, little used now that moral standards have improved. It ought not to be inferred that the victims of less objectionable threats were thought unworthy of protection since there is evidence of extensive equitable powers of protection which operated alongside the common law rule.2 2 They were exercised not merely in the case of some special relationship which gave rise to an inference of over- reaching,2s but in all cases where improper pressure was brought to bear. It is believed that by the time the English court system was fused in 1875, the Chancery courts had established a distinct juris- diction in matters of "pressure" which did not amount to duress at common law. 4 The supervision of contracts procured by threatening criminal prosecution was the leading example,25 though of more direct interest to the present enquiry was a single reported example of a contract set aside because it was induced by a threat to break a previous contract. 0 Why was the common law of duress not expanded? Presumably, less objectionable threats did not fit in easily to the common law formula. To decide whether relief should be given, the court would have to consider a wider range of factors, such as the bona fides of the party making the threat and the merits of the coerced trans- action. Equity was better suited to deal with such complex issues. Since fusion, however, this justification has become less satisfac- tory. While some theorists argue that a wide equitable jurisdiction remains,27 most contemporary opinion is cautious about endorsing such extensive equitable powers. 8 The protection offered by equity has become more precarious, and an extended common law rule is now urgently needed. 21 Scott v. Sebright (1886), 12 P.D. 21, 24, quoted in Chitty on Contracts 12th ed. (1890), 220, and succeeding editions. 222 Bac. Abr. 7th ed. (1832), 772. 23 E.g. Hylton v. Hylton (1754), 2 Ves. Sen. 547, 548-9, 28 E.R. 349, 350 per Lord Hardwicke, L.C. 24 Winder, Undue Influence and Coercion, (1939) 3 M.L.R. 97, 110-119. 2 15 Williams v. Bayley (1866), L.R. 1 H.L. 200. 2 0 Ormes v. Beadel (1860), 2 Giff. 166, 66 E.R. 70 (V.C.); rev'd on other grounds (1860), 2 De G.F. & 1. 333, 45 E.R. 649 (L.C.). 27 Winder, supra, f.n.24; Salmond and Winfield, Principles of the Law of Contracts (1927), 258-9; approved Mutual Finance Ltd. v. John Wetton & Sons Ltd., [1937] 2 K.B. 389, 394, [1937] 2 All E.R. 657, 661.2 8 Typical are Anson's Law of Contracts 23d ed. (1969), 247-8; Treitel, Law of Contract 3d ed. (1970), 345-6. [Vol. 20 THREATENED BREACH OF CONTRACT (b) Duress of Property Threats to property, according to the traditional common law formulation, could not constitute duress. Threats of physical violence were possibly an exception, if only because they implied a further threat of physical injury to those who stood in the way. Nineteenth century cases confirmed this narrow view of the law of duress. 9 Relief, if it was to be obtained at all, had to be obtained from courts of equity." To this general rule, a qualification must now be added. A vital distinction was drawn, from early times, between the setting aside of a contract and the recovery of money paid. 1 After some confusion in the early nineteenth century,32 the distinction was firmly adopted. The courts now held that if a person pays an invalid claim in order to release property which has been unlawfully de- tained, he may recover it0 3 Of this rule it was said, ... the principle ... must be taken as well established and generally recognised. It may produce the inconvenience of circuity of action; but the evil of allowing extortion by means of a wrongful detention of goods would be much greater; and the wrongdoer has no right to complain when he is compelled to restore money which he was warned that he had no right to extort. The case is wholly different from that class where the parties have come to a voluntary settlement of their concerns, and have chosen to pay what is found due.34 The rule applied in a variety of situations where property or business interests were threatened in order to "enforce" an invalid demand. For example, a mortgagee who refused to reconvey the land on tender of the full amount due,35 and an official or a railway com- pany which refused, on tender of the proper fee, to perform their public or statutory duty,36 were brought within the rule. Though the rule is obviously distinct from the traditional law of duress, and some judges prefer to use a different name for it,37 it is commonly known as "duress of goods" and falls within the general 2 Skeate v. Beale (1841), 11 Ad. & E. 983, 113 E.R. 688 (K.B.); Atlee v. Backhouse (1838), 3 M.&W. 633, 150 E.R. 1298 (Exch.).30 E.g. Mulholland v. Bartsch, [1939] 1 W.W.R. 100 (Alta. S.C.). 31 Astley v. Reynolds (1731), 2 Stra. 915, 93 E.R. 939 (K.B.).32 E.g. Gulliver v. Cosens (1845), 1 C.B. 788, 135 E.R. 753 (C.P.); Skeate v. Beale, supra, f.29. n Wakefield v. Newbon (1844), 6 Q.B. 276, 115 E.R. 107; Somes v. British Empire Shipping Co. (1860), 8 H.L.C. 338, 11 E.R. 459. 34 Wakefield v. Newbon, ibid., 281 and 108-9 per Lord Denman, CJ. 3 5 E.g. Fraser v. Pendlebury (1861), 31 LJ.C.P. 1. 1 E.g. Steele v. Williams (1853), 8 Exch. 625, 155 E.R. 1502; Great Western Ry. Co. v. Sutton (1869), L.R. 4 H.L. 226. 37 See In Re Hooper & Grass' Contract, [1949] V.L.R. 269, 273 per Fullagar, 3. 19741 McGILL LAW JOURNAL definition of "duress" adopted from the Restatement. Its require- ments are of interest, because they support the view that duress rules may be more or less stringent depending upon the merits of the transaction to be set aside. No particular degree of coercion is required beyond proof that the disputed claim was paid in order to obtain possession of wrongly detained property.38 The fact that the demandant believed he had a valid claim is irrelevant 9 The quota- tion above suggests that he must at least be warned that his claim is invalid but even this is not now the case, as it has been held that protest on the part of the person paying is no more than proof that he pays unwillingly,40 and this may be proved in other ways. The modesty of these requirements is presumably justified on the ground that the retention of money which is not due has little claim to protection compared to a valid contract. The English approach to duress is thus fragmented, there being not only separate legal and equitable rules, but also a special com- mon law rule dealing with coerced payments. It may be contrasted with the approach in the United States. There, though the same basic rules were inherited, the courts seem to have accepted that any threat to property can be duress in the fullest sense 41 Contracts have been set aside on account of such a threat where the threat was extremely coercive and the resulting transaction unfair 2 Some courts, developing the "subjective test", managed to include in the law of duress most of what previously belonged to equity. 3 These developments, which first appeared in the late nineteenth century, encouraged theorists to conceive of a law of duress which would bring all legal control of coercion within a single system of rules. M "Economic duress", a term designed to cover all unjustified threats to a person's property, business or other economic interests, came into prominence in theoretical45 and later in judicial discussion of 3 8 Shaw v. Woodcock (1827), 7 Barn. & Cresw. 73, 108 E.R. 652 (K.B.). 39Knutson v. The Bourkes Syndicate, [1941] S.C.R. 419, 425. 4oMaskell v. Homer, [1915] 3 K.B. 106,120-1,124,126 (C.A.). 41 See 5 Williston on Contracts, supra, f.n.7, para. 1617; Dalzell, supra, fmn.5, 242. 42 E.g. First National Bank of David City v. Sargent, 65 Neb. 594, 81 N.W. 595, 600, 59 L.R.A. 296 (1902).43 E.g. Galusha v. Sherman, 105 Wis. 263, 81 N.W. 495, 47 LR.A. 417 (1900). Missouri law is a good example of the development of this principle: see Mississipi Valley Trust Co. v. Begley, 298 Mo. 684, 252 S.W. 76 (1923), and cases there cited. 44 10 Am. & Eng. Encyc. Law 2d ed. (1899), 321-7; 3 Williston on Contracts 1st ed. (1922), 2830; 2 Restatement of Contracts, Ch. 16, 938. 45 E.g. Dalzell, supra, f.n.5; Dawson, "Economic Duress", supra, f.n.6. Cf. Annot., 79 A.L.R. 655 (1932) ("business compulsion"). [Vol. 20 THREATENED BREACH OF CONTRACT on this point, expressed himself against an "unlawfulness" test, stating that the enquiry in each case is whether "the party receiving the money [has] the right to take advantage of his neigbour's ne- cessity or not".5 The other judges do not seem to have endorsed one view or another,56 and later judicial discussion leaves the matter open. 57 These cases emphasize the practical importance of the question of whether the threatened action is unlawful. If, as in Knutson, the party making the unjustified demand has refused to' perform his contractual duty, the party seeking recovery is not likely to en- counter any great obstacles. If, as in Smith, the threat could be carried out without any breach of duty, relief will be much more difficult 58 to obtain. It would be premature, however, to conclude that a general rule to this effect will dispose of all the problems with which this article is concerned. In theory at least, it is possible to maintain a broader view of duress by threatened breach of contract which could include any threat, lawful or not, which forces the other party to a contract to forego the benefits to which he is entitled under it. Such a threat is wrongful because it contravenes an implicit duty not to subvert the terms of an existing contract and to co- operate with the other party in realizing its purposes. Whether or not such a theory can be maintained in law depends upon a much closer examination of the implications of the principles established in these cases and their application in subsequent decisions. (ii) American Law The law has developed somewhat differently in the United States. It must be remembered that a great deal more was at stake than the logical extension of a narrow rule governing coerced payments. Because the doctrine of duress tended to be seen as a general prin- ciple affecting all transactions induced by threat, including con- tracts as well as money payments, a holding that a threatened breach of contract could amount to duress would have far-reaching con- sequences. Some hesitation was to be expected. The issue first arose in the late nineteenth and early twentieth century. When invited to find that a threat to break a contract could 55 Ibid., 65. 56 See ibid., 68 per Rich,J., and 70. per StarkeJ. 57 See Nixon v. Furphy (1925), 25 S.R. (N.S.W.) 151; Criterion Theatres Ltd. v. Melbourne and Metropolitan Board of Works, [1945] V.L.R. 267; In Re Hooper & Grass' Contract, supra, f.n.37. All dealt with threatened conduct which was technically a breach of duty to the plaintiff. 58 For Canadian authority, see cases cited infra, Section 3(c), and also Sutherland v. Sutherland, [1946] 4 D.L.R. 605, 613-4 (B.C.S.C.). 1974] McGILL LAW JOURNAL constitute duress, some courts denied the possibility outright.59 In others, relief was refused for reasons which made the possibility very doubtful. In Silliman v. U.S.,60 for example, a claim of duress was rejected because the claimants' duty, "if they expected to rely upon the law for protection, was to disregard the threat of the department, and apply to the courts for redress against its repudia- tion of a valid contract". It was apparently thought irrelevant that had the claimants waited for their suit to be heard, they might in the meantime have suffered financial ruin. This attitude was justified in the influential case of Hackley v. Headley, where the court said, It is not pretended that Hackley & McGordon had done anything to bring Headley to the condition which made his money so important to him at this very time, or that they were in any manner responsible for his pecu- niary embarrassment except as they failed to pay this demand.6' The court thought it unfair to treat the claimant differently from anyone else who re-negotiated a contract which had broken down merely because his personal circumstances gave rise to a special need for performance, preventing resort to the normal remedies for breach of contract. In the light of these authorities, it is difficult to see how a successful plea of duress could ever have been made out, though admittedly their effect was more optimistically summarized by the United States Supreme Court in 1926.62 Some decisions nevertheless permitted relief without directly opposing the leading authorities.'" A device occasionally used was to classify the threat as an invasion of "property rights". Technically, this was sometimes justified. In one case, for example, it was applied to the conduct of a seller of an identified herd of livestock who, after most of the price had been paid, refused to deliver it to the pur- chaser.04 In this case, "property" in the stock may have passed to 69 E.g. Miller v. Miller, 68 Pa.St.R. 486, 493-4 (1871); Tucker v. State, 72 Ind. 242, 245 (1880); Taylor v. Ford, 131 Cal. 440, 63 P. 770, 772 (1901); Wood v. Kansas City Home Telephone Co., 223 Mo. 537, 123 S.W. 6, 13 (1909). 60 101 U.S. 465, 471, 25 L. Ed. 987, 989 (1879). Cf. Cable v. Foley, 45 Minn. 421, 47 N.W. 1135, 1136 (1891); McCormick v. Dalton, 53 Kan. 146, 35 P. 1113 (1894); Rosenfeld v. Boston Mutual Life Ins. Co., 222 Mass. 284, 110 N.E. 304 (1915). 0145 Mich. 569, 8 N.W. 511, 514 (1881), criticized in Dalzell, supra, f.n.5, 256-8. The argument is not confined to failure to pay money; see Goebel v. Linn, 47 Mich. 489, 11 N.W. 284 (1882). The decision was widely cited in contemporary cases in many jurisdictions. Its most recent application seems to have been in Gill v. S.H.B. Corp., 332 Mich. 700, 34 N.W. 2d 526, 7 A.L.R. 2d 252 (1948).62 Hartsville Oil Mill v. U.S., 271 U.S. 43, 48, 46 S.Ct. 389, 70 L. Ed. 822 (1926). 63See Dalzell, supra, f.n.5, 255-276; 5 Williston on Contracts, supra, f.n.7, para. 1620.64 Lonergan v. Buford, 148 U.S. 581, 37 L. Ed. 569, 572 (1893). [Vol. 20 THREATENED BREACH OF CONTRACT the purchaser, at least in a technical sense, before the threat was made. In other cases, such reasoning was more tenuous. In Harris v. Cary,6 5 the plaintiff had been promised shares in a trading company, in return for services rendered. The defendant said he would allow the company to go to ruin if the plaintiff would not accept a reduced number of shares. Though such a threat would seem to be no more than a threat to break an implicit term of the contract, the court evidently saw it as a threat to property rights. This is difficult to re- concile with the leading authorities. Although the device occasionally re-appears in modern cases, 6 it does not seem to have played a significant part in shaping modern law. More significant was the doctrine of "business compulsion" or"moral duress"6 7 which came into vogue in the early twentieth century and has been described in these terms: ... where one, to prevent injury to his person, business or property, is compelled to make payment of money which the party demanding has no right to receive, and no adequate opportunity is afforded the payor to effectively resist such payment, it is made under duress, and can be recovered.68 The doctrine was useful in cases where a party refused to perform his contract unless he received an additional benefit,6 9 or attempted to enforce an invalid demand by threatening to invoke a right of 65 112 Va. 362, 71 S.E. 551 (1911). 66E.g. Smelo v. Girard Trust Co., 158 Pa. Super. 473, 45 A. 2d 264, 265 (1946); Weiner v. Tele King Corp., 123 N.Y.S. 2d 101, 104-5 (Sp. Term 1953); U.S. ex rel. Kirby v. John A. Johnson & Sons, 137 F. Supp. 881, 886 (E. D. Tenn. 1954); aff'd 229 F. 2d 713 (6th Circ. 1955). 607These terms tend to be used indiscriminately to cover all types of duress not included in the old common law. They can be used more precisely. "Business compulsion" has been used to describe the rule stated in the text; see e.g. Ferguson v. Associated Oil Co., 173 Wash. 672, 24 P. 2d 82, 83 (1933); noted (1934) 8 Wash.L.Rev. 140. "Moral duress" is used particularly in Illinois and Missouri, where the rule is combined with the "subjective test" of duress, so that the court takes into account pressures which would not coerce a reasonable businessman, but in fact coerce the particular plaintiff. See Comment, Moral Duress in Illinois, [1955] U.I1.L.F. 312; Brueggestradt v. Ludwig, 184 Il1. 24, 56 N.E. 419 (1900); Rees v. Schmits, 164 I11App. 250, 258 (1911). 68 Illinois Merchants Trust Co. v. Harvey, 335 Ill. 284, 167 N.E. 69, 72 (1929). 69E.g. Brown v. Worthington, 162 Mo.App. 508, 142 S.W. 1082 (1912); Pittsburgh Steel Co. v. Hollingshead & Blei, 202 I11App. 177 (1916); Manhattan Milling Co. v. Manhattan Gas & Elec. Co., 115 Kan. 712, 225 P. 86 (1924); Inland Empire Refineries Inc. v. Jones, 69 Ida. 335, 206 P. 2d 519 (1949). 19743 McGILL LAW JOURNAL supply them. Not being able to obtain them elsewhere, the plaintiff risked the collapse of its government contract if the defendant would not honour its obligations. It paid the money, and then sued for its recovery. The defendant's principal objection, which was readily disposed of by reference to contrary Australian authority, 9 was that a threatened breach of contract could not constitute duress. Of greater interest were its other two arguments, which raised important questions. First, how far does the law of duress extend? The defendant argued that there was no room for its operation here, since the parties' former contractual rights had been superseded by a new contract under which the plaintiff agreed to pay the additional amount. The court gave two alternative answers: In our view, the whole of the circumstances indicate that Mr. Sundell did no more than agree to pay any increase to which this or any other circumstance would entitle the appellant as against the respondent. But even if such a promise was made as is alleged, we are of opinion that it was not binding because there was no consideration for it ... every promise allegedly given to the plaintiff by the defendant under the so- called second agreement was identical with a promise given under the original agreement.8 0 If the second answer is combined with the court's ultimate con- clusion that relief should be given for duress, an added function is given to the law of duress. It provides a remedy not only where money is paid in response to a simple demand, but also where money is paid under an apparent contract of modification which turns out to be invalid for want of consideration. This is particu- larly significant because in the latter case, the right of recovery does not seem easy to establish without the law of duress. It is true that the court's reasoning on consideration may be an obiter dictum, but it is nevertheless a valuable indication of the direction the law of duress may take. If the courts are prepared to go this far, they may be urged to go the full distance and hold that, in appropriate cases, the law of duress may invalidate otherwise binding contracts. The distinc- tion made in cases of duress of goods between recovery of money paid and the setting aside of a contract has already been strongly criticized by commentators as being arbitrary and unrealistic.81 7) Nixon v. Furphy, supra, fan.57; White Rose Flour Milling Co. v. Australian Wheat Board (1944), 18 A.L.J.R. 324 (t.Ct., RichL.); In Re Hooper & Grass' Contract, supra, f.n.37. See also Carr v. Gilsenan, [1946] Qd. St.R. 44 (Full Ct.).8oSupra, fmn.78, 327. s8Goff & Jones, Law of Restitution (1966), 150-1; 5 Williston on Contracts, supra, f.n.7, para. 1617. [Vol. 20 THREATENED BREACH OF CONTRACT In the present context the distinction is even more unsatisfactory, because it means that the courts must apply the technical law of consideration when much more flexible methods for determining the validity of a coerced transaction are available within the law of duress itself. It is true that American courts seem to have been reluctant to extend the law so far."' More recently, however, the New York 83 and Federal courts '4 have clearly done so, and this accords with the general theory of economic duress developed in cases of duress of goods.85 In the Commonwealth, the same result could be achieved by amalgamating the law of duress with older equitable doctrine,86 a step with much to commend it in terms of simplicity and rationality. Secondly, what degree of coercion is required? In Sundell, the defendant argued that there was no proof of "practical compul- sion". These terms are used in other Australian cases,87 though it is not -clear whether they imply that "genuine coercion" must be established as a matter of fact. Speaking of duress of property generally, the court in In Re Hooper & Grass' Contract said that "the withholding of another's legal right is, I think, itself treated as 'practical compulsion' ".8 These comments seem, how- ever, to be obiter, since in that case there was an accompanying threat to cancel the contract which was apparently coercive.8" The Canadian Supreme Court seems to have taken the same view in Knutson,90 but there too there was some evidence of coercion because the plaintiffs stood to lose a profitable re-sale if they did not secure title within a reasonable time. The court in Sundell departed from these dicta by treating "practical compulsion" as a separate question of fact to be deter- mined by the trial judge.91 A similar emphasis on coercion as an 82 Supra, frn.71. 8 3 Supra, f n.72. 8 4 Supra, fmn.73. 85 Supra, fn.41. 86 Discussed supra, section 2(a). See Scott v. Sebright (1886), 12 P.D. 21, 24, 31, and explanation of that case (and others) in Galusha v. Sherman, supra, f.n.43. 87 See Smith v. William Charlick Ltd., supra, f.n.49, 56 per IsaacsT.; Nixon v. Furphy, supra, f.n.57, 160; Criterion Theatres Ltd. v. Melbourne & Metro- politan Board of Works, supra, fm57, 274. There has been subsequent High Court discussion of the colore officii principle, but that is not in issue here. 88 Supra, frn37, 272. Fullagarj. concedes that practical compulsion may be an issue of fact in other cases. 89 Ibid., 271. 90 Supra, fmn39, 423. 91 Supra, f.n.78, 328. 1974] McGILL LAW JOURNAL issue of fact is found in another judgment concerned with a re- fusal to perform a contract for the sale of goods, where the court observed that the plaintiff buyer "could not help itself".9 2 These statements, while falling short of establishing a required degree of coercion in cases of duress by threatened breach of contract, indicate judicial interest in this possibility, and may be the foun- dation of a new rule. The requirement is generally imposed in American decisions. Typical is the statement of the majority of the New York Court of Appeals in Austin Instrument Inc. v. Loral Corp.: ... a mere threat by one party to breach the contract by not delivering the required items, though wrongful, does not in itself constitute economic duress. It must also appear that the threatened party could not obtain the goods from another source of supply and that the remedy of an ordinary action for breach of contract would not be adequate.93 This view can be traced back to two early Court of Appeals deci- sions. In one, a contractor had to do extra work in order to get his money, but there was no evidence that he could not have sued for it in the normal way. The court treated him as having made a gift of the extra work.94 In the other, where a creditor agreed to settle for a reduced sum, the court said: There was nothing so peculiar in their position, or in the position of [the debtor], as to give them any stronger or better claim for relief than any creditor would have who compromises a claim against his debtor for fear that he would be subjected to expense, delay, and risk in enforcing payment thereof.95 The rule has been consistently enforced in New York, and appears in various forms in many other jurisdictions. The reason for the rule evidently lies in the court's concern not to upset ordinary commercial arrangements. If a business- man, for reasons of expedience or otherwise, chooses not 'to insist on his strict legal rights, it would be wrong to allow him to recall the transaction later on the pretext that it was induced by a' threat- ened breach of contract. In the absence of evidence of coercion, the transaction must be presumed fair, and the businessman left to be content with whatever commercial goodwill he may have acquired. This policy applies to duress by threatened breach of contract with special force; it is less apposite in cases where the 92 White Rose Flour Milling Co. v. Australian Wheat Board, supra, f.n.79, 327. 93 29 N.Y. 2d 124, 272 N.E. 2d 533, 535 (1871). 04 Doyle v. Rector, etc., of Trinity Church, 133 N.Y. 372, 31 N.E. 221, 222 (1892). 95 Secor v. Clark, 117 N.Y. 350, 22 N.E. 754, 755 (1889). [Vol. 20 THREATENED BREACH OF CONTRACT vious cases where duress was held to exist, the courts undertook to show that the coercing party was guilty of something more than a mere threat to break the contract.0 2 An attractive middle way between a discretionary approach and a hard and fast rule is to be found in the decisions of the Federal courts. This approach, which has been developed 6ver a long period,'10 3 is stated in Fruhauf Southwest Garment Co. v. U.S.: An examination of the cases, however, makes it clear that three elements are common to all situations where duress has been found to exist. These are: (1) that one side involuntarily accepted the terms of another; (2) that circumstances permitted no other alternative; and (3) that said circumstances were the result of coercive acts of the opposite party.104 The third element is crucial, and is elaborated in the judgment: In order to substantiate the allegation of economic duress or business compulsion, the plaintiff must go beyond the mere showing of reluctance to accept and of financial embarrassment. There must be a showing of acts on the part of the defendant which produced these two factors. The assertion of duress must be proven to have been the result of the de- fendant's conduct and not by the plaintiff's necessities. 105 The defendant must therefore be "responsible" for the plaintiff's troubles." 6 This implies both blame and causation. The defendant is responsible for the plaintiff's difficulties only if he commits a wrongful act. It is not duress to refuse to deal with the plaintiff except on hard terms,10 7 or to proceed against Construction Co. v. W.M. Smith Electric Co., supra, f-n.98, as a leading ex- ample). Pre-1950 cases are generally equivocal, some allowing relief for un- clear reasons, some refusing relief because of failure to prove coercion, and some refusing relief in terms which make the possibility of duress doubtful. 102 Wou v. Galbreath Ruffin Realty Co., 22 Misc. 2d 463, 195 N.Y.S. 2d 886, 888-9 (Sp. Term 1959); Pearlman v. State, 18 Misc. 2d 494, 191 N.Y.S. 2d 422, 427 (Ct.Cl. 1959); and cf. Manno v. Mutual Benefit Health and Accident Associa- tion, 18 Misc, 2d 80, 87 N.Y.S. 2d 709, 713 (Sp. Term 1959). 103 See Hartsville Oil Mill v. U.S., 271 U.S. 43, 48-9, 46 S.Ct. 389, 70 L. Ed. 822 (1925); Hazelhurst Oil Mill & Fertilizer Co. v. U.S., 42 F. 2d 331 (Ct.Cl. 1930); James Shewan & Sons v. U.S., 73 Ct.Cl. 49 (1931); Struck Construction Co. v. U.S., 96 Ct.Cl. 186 (1942); U.S. v. Bethlehem Steel Corp., 315 U.S. 289, 301-2, 62 S.Ct. 581, 86 L. Ed. 855 (1942). Dalzell, supra, fn.5, 254, puts such cases in a special category relating to government officials, but the principle now seems to be applied more widely. 104l111 F.Supp. 945, 951 (Ct.C1. 1953). Cf. W.R. Grimshaw Co. v. Nevil C. Withrow Co., 248 F. 2d 896, 904 (8th Circ. 1957); Urban Plumbing and Heating Co. v. U.S., 408 F. 2d 382, 389, 187 Ct.Cl. 15 (1969). 1O5 Ibid., 951. 106 Ibid. 107 French v. Shoemaker, 14 Wall. (U.S.) 314, 20 L. Ed. 852, 856 (1972); Law- rence v. Muter Co., 171 F. 2d 380, 382 (7th Circ. 1948). 19741 McGILL LAW JOURNAL him on a lawful claim. 08 In cases of threatened breach of con- tract, there must not only be a refusal to perform the contract,10 9 but also oppressive conduct which goes beyond what is reasonably necessary to protect the defendant's legitimate interests."0 There must also be a clear causal connection between the wrongful conduct and the coercive circumstances. It is not enough that the defendant makes existing difficulties worse."' If the de- fendant fails to pay money due under the contract,"2 it must be shown that the payment would have relieved the plaintiff of his financial difficulties. So, in one of the few cases where the failure to pay money has been held to constitute duress, the court found that "if the plaintiff had been credited with as much as $150,000 [its minimum claim] on the parts claim, that sum, together with other payments and credits, would have satisfied almost all of its debt to the defendant"," 3 whose threat to default the plaintiff under the contract would then have been averted. The theory of the causal test seems to be that there is a strong case for relief only where the defendant takes advantage of his own wrong." 4 In practice, it presumably means that a man in general financial difficulties may go around to his debtors col- lecting what he can, and no enquiry will be made into the propriety of the arrangements he makes. When he deals with a single major debtor, however, he is much more likely to be overreached, and he is given special protection. The test seems to be a useful device to limit the doctrine to those cases where it is most clearly needed. The whole Federal approach, while it is perhaps unduly cautious, 108 In Re Prima Co., Harris Trust & Savings Bank v. Keig, 98 F. 2d 952, 965 (7th Circ. 1938), cited in Lawrence v. Mutter Co., ibid., as authority for the proposition that "mere stress of business condition does not constitute duress where the defendant was not responsible for such circumstances". 109 W.R. Grimshaw Co. v. Nevil C. Withrow Co., supra, fan.104, 904 (threat of lawful declaration of default not duress); Harvey-Whipple Inc. v. U.S., 342 F. 2d 48, 53, 169 Ct.Cl. 689 (1965); Inland Empire Builders Inc. v. U.S., 424 F. 2d 1370, 1377 (Ct.Cl. 1970). 110 See cases cited infra, f.n.115, and cf. Fruhauf, supra, f.n.104, 952. " As in Fruhauf, ibid., 951-2. 112 In other types of case, proof is no doubt much easier. See e.g. Urban Plumbing and Heating Co. v. U.S., supra, f.n.104 and Struck Construction Co. v. U.S., supra, f.n.103 (disruption of construction contracts by unreasonable orders). 113 Aircraft Associates & Manufacturing Co. v. U.S., 357 F. 2d 373, 379, 174 Ct.Cl. 886 (1966). Cf. James Shewan & Sons Inc. v. U.S., supra, f.n.103 (two major debts could have been satisfied). 114 James Shewan & Sons Inc. v. U.S., ibid., 93. [Vol. 20 THREATENED BREACH OF CONTRACT is a useful illustration of the way in which courts can extend the law of duress and yet avoid its more troublesome implications. In view of the relatively undeveloped state of Commonwealth law, there is little point in speculating which of these different approaches to the problem of "wrongfulness" is most appropriate. Clearly, there are persuasive arguments in favour of a test of wrong- fulness which does not depend solely upon whether the threatened action would be a breach of contract. They become even more persuasive when considered in relation to threats made in support of bona fide legal claims. If the party making a threat knows that he is asking for more than the contract allows him, his conduct will only be justifiable in exceptional circumstances, as where, for example, the original contract has become unsuitable because of unexpected changes in conditions. If, however, he genuinely, though incorrectly, believes that he is asking only for what is due, his threats cannot normally be regarded as oppressive." 5 Yet it may still be possible for him to act wrongfully by taking unnecessarily harsh or sudden measures which prevent the other party from litigating a disputed legal issue. The problem of the bona fide legal claim has arisen in a number of Commonwealth cases on duress by threatened breach of con- tract, and it must be conceded that this consideration has been disregarded in the leading authorities. In Knutson v. The Bourkes Syndicate,"6 where the defendant vendor relied on a strong moral as well as legal claim in refusing to perform the contract, the court treated the existence of his bona fide claim," 7 which was not clearly void,"" as irrelevant. The same attitude is evident in In Re Hooper & Grass' Contract,"9 where a vendor of land refused to convey it until a disputed legal demand was paid, and the court, relying on Knutson, allowed relief without reference to the ven- dor's belief in the validity of his demand. While it is true that these cases did not involve any element of compromise, neverthe- less the contracts were performed in good faith, on the under- standing that the vendors' legal demands had prevailed. It is re- 115Cf. Bennett v. Mahon, 180 F. 2d 224, 231 (8th Circ. 1950); La Crosse Garment Manufacturing Co. v. U.S., 432 F. 2d 1377, 1382-3 (Ct.Cl. 1970). See also Weinman Pump Manufacturing Co. v. Cline, 116 Ohio App. 4, 183 N.E. 2d 465, 471-2 (1961) per Duffey P.J. diss. 116 Supra, f.n.39. "17 Ibid., 425. 118 Ibid., 423. 119 Supra, f.n.37; and ef. Nixon v. Furphy, supra, f.n.57. Compare Donaldson v. Gray, [1920] V.L.R. 379 (Sup. Ct.). 1974] McGILL LAW JOURNAL [the Syndicate's] position under the option agreement".u 5 Further support is found in In Re Hooper & Grass' Contract,u6 where an implicit threat of cancellation was an important consideration in favour of recovery. Curiously, in neither case was reference made to the fact that the payment in Knutson was not the result of a threat "to withhold that to which the other party was legally en- titled",127 or a threat to perform some unlawful act. Assuming Knut- son is correct, the decision implies that a threat to perform an unlawful act is not, after all, necessary for duress. Support for this view, as has already been observed, can be found in two of the judgments in Smith v. William Charlick Ltd. 28 In America, the better view also favours recovery. 29 Earlier cases, where relief was refused,'30 can be ascribed to a general fail- ure to recognize the coercive effects of uncertainty.131 The theo- retical basis of recovery is beyond argument, at least in jurisdic- tions which accept the "business compulsion" rule.13'2 The rule seems confined to simple money payments; as far as compromises are concerned, it would, in view of the principles which apply to duress by refusal to perform a contract, be difficult to justify relief based solely on another's threat to exercise rights he genu- inely believes he has."" 125 Ibid., 425. 12()Supra, f.n.37, 271. 127 Ibid., 272. 12S Supra, fmn.49, 55-6 per Isaacs,J., and 65 per HigginsT. 12D Dalzell, supra, f.n.5, 273-4; Note, Quasi-Contractual Recovery of Money Paid to Avoid Penalty or Forfeiture, (1934) 47 Harv.L.Rev. 1413; Annot., 86 A.L.R. 388 (1933). 130 E.g. Rosenfeld v. Boston Mutual Life Ins. Co., supra, fn.60. '3' Cf. Dawson, "Civil Litigation", supra, frn.6, 686-8. 132 Discussed supra, section 2(c) (ii). 138 A number of American authorities oppose relief here, for a variety of reasons. It is said that the threat to bring proceedings in support of a legal claim is not duress: Booher v. Williams, 341 IllApp. 504, 95 N.E. 2d 518, 521; Causey v. Matson, 215 Ga. 306, 110 S.E. 2d 356, 359 (1959) (though the court seems also to have found in these cases that the claim was valid); that the plaintiff could have litigated rather than "compound and complex his posi- tion": Yingling Aircraft Inc. v. Budde, 208 F.Supp. 773, 776 (D.C. Colo. 1962); that the plaintiff was not unlawfully constrained where he had counsel to assist him in evaluating the unfounded threat: Alloy Products Corp. v. U.S., 302 F. 2d 528, 530-1 (Ct.Cl. 1962); and that the compromise was "voluntary", the refusal to proceed under a contract or to stand suit not being duress: Nesbitt Fruit Products Inc. v. Del Monte Beverage Co., 177 CalApp. 2d 353, 2 Cal.Rptr. 333, 338 (1960). Different principles apply where one party uses such a threat to take unfair advantage of the ignorance and inexperience of the other. (Vol. 20 THREATENED BREACH OF CONTRACT One might question whether the same principles would not preclude the recovery of money, since the person making the de- mand will usually be acting in good faith. It must be remembered, however, that the money will be paid to avoid a feared legal conse- quence, not to induce the recipient to perform some desired action. The transaction is therefore of slight merit, when compared with a compromise of a legal dispute, or the acceptance of another's legal claim in order to rehabilitate a contract which has come to grief on account of the parties' legal differences. If moral wrong- fulness is required at all, it may be found in the unfair use of a forfeiture provision to prevent a party from taking a genuine claim to law when he is willing and able to perform the contract no matter what obligation it imposes. What degree of coercion is required? The fear of the loss of rights under the contract will usually be coercive in itself. The only question which then arises is whether the person making the payment should, if he can, resort to some other legal remedy instead. Orthodox American theory says that he should. This has been taken particularly seriously in California, where recovery has been denied in two cases in which the plaintiffs could have invoked a statutory provision empowering the court to stay for- feiture. 3 4 In a third case, the recovery claim went to trial, but it seems that the claimant would need to show that he acted reason- ably in not resisting the claim earlier.1 5 Whether this is good policy is another matter. The Massachusetts Supreme Court ob- served here: The salutary result of allowing recovery on such facts is that the area of possible litigation is surely confined to the only issue genuinely in dispute, and time is afforded to determine that issue in due and seemly course.136 If the statutory procedure were invoked, there would be the addi- tional issue of whether the forfeiture should be stayed and if so, upon what terms. No attempt was made in the California cases ' 34 Texas Co. v. Todd, 19 CalApp. 2d 174, 64 P. 2d 1180, 1187 (1937); Western Gulf Oil Co. v. Title Ins. & Trust Co., 92 Cal.App. 2d 257, 206 P. 2d 643, 648 (1949). Compare e.g. Sunset Copper Co. v. Black, supra, f.n.70 (no enquiry about other remedies), and Buck Kreihs Co. Inc. v. U.S., 331 F.Supp. 1173, 1174-5 (E.D.La. 1971) (promise to repay inferred from facts which did not establish a sufficient degree of coercion to found a duress claim). '35 Lewis v. Fahn, 113 Cal.App. 2d 95, 247 P. 2d 831, 834-5 (1952). (The availability of the 'statutory procedure as a means of resistance is not mentioned.) 136 Governor Apartments Inc. v. Carney, 342 Mass. 351, 173 N.E. 2d 287, 289 (1961). 19743 McGILL LAW JOURNAL to show that the procedure would provide a preferable forum, or that there would be any other countervailing advantages. More- over, the rule that a person considering payment must act "reason- ably" is unhelpful. Not knowing what the court might regard as reasonable, he may be impelled towards an unsuitable alternative remedy. On the whole, it is difficult to find a convincing justifica- tion for a rule which insists on the exercise of any alternative remedies. There seems no reason, therefore, why the courts should not allow recovery readily, without being deterred by the fact that the recipient acted in good faith, or that alternative remedies were available. The principle is a logical one which can be applied in analogous situations. A good example is the case of a -building contract, where the building owner claims that certain work is included in the contract, and threatens to declare a default if the builder does not carry it out. What is the position if the builder carries out the work, but later seeks compensation, offering to prove that the work was not included in the contract? Hitherto, the builder has been given relief on principles which seem peculiar to the law of quantum meruit. This remedy has a different history,137 and apparently different requirements, 38 from the remedies available for the recovery of money payments. In Molloy v. Liebe, the Privy Council said of such a claim: Molloy insisted on the works being done, maintaining that they were not extras. The contractor on the other hand maintained that they were. As Molloy insisted on the works being done, in spite of what the contractor told him, the umpire naturally inferred (and it was for him to draw the inference) that the employer impliedly promised that the works would 'be paid for either as included in the contract price or, if he were wrong in his view, by extra payment to be assessed by the architect. It is difficult to see how the umpire could have drawn any other inference from the facts as found by him, without attributing dishonesty to Molloy. 3 9 This view is now orthodox building law, 4 " though it is by no means free from doubt.'4 ' '37Ames, Lectures on Legal History (1913), 154-6; Bullen and Leake, Precedents of Pleadings 2d ed. (1863), 31-33, 36-42. 138 Goff and Jones, Law of Restitution (1966), 29-31, 144; Denning, Quantum Meruit: the Case of Craven-Ellis v. Canons, (1939) 55 L.Q.R. 54. See e.g. Craven-Ellis v. Canons Ltd., [1936] 2 K.B. 403, 412, [1936] 2 All E.R. 1066, 10734 (C.A.); Upton-on-Severne R.D.C. v. Powell, [1942] 1 All E.R. 220, 221 (CA.). 139 (1910), 102 L.T. 616, 617. 140 Hudson's Building Contracts 10th ed. (1970), 541-3, 548. Cf. Spencer, Powers of Direction and Determination under Construction Contracts, (1955) 41 Va.L.Rev. 343, 348-52; Ellis, Note, (1961) 19 Fac.L.R. 171.1-1 See counsel's use of a similar argument in Davis Contractors Ltd. v. Fareham U.D.C., [1956] A.C. 696, 704, [1956] 2 All E.R. 145 (H.L.), and the [Vol. 20 THREATENED BREACH OF CONTRACT To the extent that they proceed on the view that a threat to do a lawful act cannot constitute duress, the cases may be open to question. On a broader theory of duress, it may well be that proof of the unlawfulness of the threat, if carried out, is neither a sufficient nor necessary condition of relief in all cases. It may be expected that relief for duress will increasingly come to depend upon the application of criteria which are specially developed for that purpose. Applying such criteria, a plausible argument may well be made that any extraneous pressure, brought to bear to frustrate another party's legitimate contractual expectations, can constitute duress. In America, despite the encouragement offered by legal theory, few courts have gone that far. The courts of New Jersey are an exception. They do not test "wrongfulness", even in this context, by reference to the lawfulness of the threat.' 5 ' In the leading case on duress, Rubenstein v. Rubenstein, the Supreme Court said, ... means in themselves lawful must not be so oppressively used as to constitute, e.g., an abuse of legal remedies .... The act or conduct com- plained of need not be 'unlawful' in the technical sense of the term; it suffices if it is 'wrongful in the sense that it is so oppressive under given circumstances as to constrain one to do what his free will would refuse...' .152 This principle was elaborated in an earlier decision,153 where it was said, Judgment whether the threatened action is wrongful or not is colored by the object of the threat. If the threat is made to induce the opposite party to do only what is reasonable the court is apt to consider the threatened action not wrongful unless it is actionable in itself. But if the threat is made for an outrageous purpose, a more critical standard is applied to the threatened action.1 53a These observations have proved helpful where pressure has been brought to bear in an effort to alter the effect of the contract. In Ross Systems Inc. v. Linden Dari-Delite Inc.,15 4 a commission agent concluded a franchise agreement with a retailer, under which the retailer was to be supplied with Farmland ice cream at a price fixed in the agreement. The agent then negotiated an extra commis- sion from Farmland, and this increased the price the retailer had to pay Farmland. The retailer was forced to pay the extra charge because it feared that Farmland might terminate the franchise agree- 151 On the influence of the Restatement here, see Talbott, Contracts, (1956) 11 Rutgers L.Rev. 238, 242-3. 15220 N.J. 359, 367, 120 A. 2d 11, 15 (1956). 153 Hochman v. Zigler's Inc., 139 N.J.Eq. 139, 50 A. 2d 97. (Ch. 1946). iSla Ibid., 144 and 100. 15435 NJ. 329, 173 A. 2d 258 (1961). 19741 McGILL LAW JOURNAL ment, and that the agent might indulge in harassing tactics. The court allowed recovery of the extra payments as money paid under duress. The pressure was apparently held "wrongful" simply because it had the effect of increasing the contract price.155 Reference was made, elsewhere in the judgment, to a previous Supreme Court decision in which a similar result had been coerced by a threat to withold future supplies of goods, and the money had also been held recoverable. 10 To the same effect is Wolf v. Marlton Corp.,157 where an un- willing purchaser of a house in a subdivision told the subdivider that he would re-sell the house to an "undesirable purchaser" if he was called upon to complete the purchase. The subdivider, fearing the adverse effect this would have on his other sales, did not call for completion. He nevertheless sued the purchaser for breach of con- tract and was successful, his failure to call for completion being excused on the ground that it was coerced. Of the purchaser's threat, the court said, ... where a party for purely malicious and unconscionable motives threatens to re-sell such a home to a purchaser, specially selected because he would be undesirable, for the sole purpose of injuring the builder's business, fundamental fairness requires the conclusion that his conduct in making this threat be deemed "wrongful", as the term is used in the law of duress. 5 s The fact remains that few courts have carried the law of duress this far. The reason presumably lies deeper than any announced rule that a threat to commit a lawful act cannot amount to duress. Practical problems of decision must not be under-estimated. Some courts may be unwilling to substitute broad notions of "fundamental fairness" or "commercial morality" for established concepts of con- tract law, though they freely apply equally imprecise notions, such as "reasonable care", in other contexts. Others may see themselves being carried far beyond ordinary contractual considerations. Wolf v. Marlton, for example, has been criticized on the ground that an "undesirable purchaser" presumably meant a coloured person, and the decision: therefore had the unconstitutional effect of encouraging 1'5Ibid., 335 and 261-2. 5OPompton Stationery Corp. v. Passaic County News Co., 127 NJ.L. 235, 21 A. 2d 849 (Sup.Ct. 1941). There the threat does not seem to have been in breach of contract, though it may have been part of an unlawful monopolistic scheme. 15757 NJ. Super. 278, 154 A. 2d 625 (App.Div. 1959). 158 Ibid., 288 and 630. [Vol. 20 THREATENED BREACH OF CONTRACT racial discrimination in subdivisions of land. 5 9 Problems may arise, too, with the idea of a "threat". Does it include, for example, the conduct of one who says he does not wish to receive a benefit, but nevertheless accepts it in circumstances where the other party has no option but to give it to him?60 The extent to which the law, is developed here may depend more upon the willingness of courts to embark on a new process of decision than upon the logical develop- ment of any single principle. 4. Conclusion There are evident advantages in using the law of duress to regulate pressures which one party to a contract may apply against the other. It has a flexibility which is not often found in the more traditional methods of dealing with contract modifications. It also offers, at least as an ideal, the prospect of a coherent body of principle which will cover all aspects of such coercion in a consis- tent way. Though present Commonwealth law falls short of this ideal, there are welcome signs of a movement towards a broader theory of duress by threatened breach of contract. One sign is the gradual extension of the scope of the law. Once a narrow rule applied to payments made under duress of goods, it has extended beyond this and closely analogous situations to cover all paynents made to induce another to perform his contractual duty, and apparently includes payments made under contracts which prove to be invalid for want of consideration. It also includes payments made, and possibly work performed, to avert threats to exercise 'claimed rights of cancellation or forfeiture under a con- tract. Two problem areas still remain. One is where the coercive conduct induces a contract which cannot be set aside for any other ground than duress. Here, it has been argued that the law of duress might well be invoked, without undue derogation from existing theory. The other is where extraneous lawful pressure is brought to bear to force a departure from the contract. This is a problem with difficulties of its own which few common law courts have yet been prepared to tackle. On the whole, the areas which the doctrine has yet to cover are those in which it could only be invoked in unusual circumstances. 159 Note, (1960) 34 St. John's L.Rev. 319, 322. One suspects that New Jersey courts may occasionally avoid broad issues by holding that the plaintiff's will was not overborne, even though the threat had some coercive force; see Shalit v. Investors Savings and Loan Association, 101 NJ.Super. 283, 244 A. 2d 151, 154 (1968). 160As in City of Moncton v. Stephen, supra, frn.149, 724. 1974]