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Grounds for invalidating a shareholder agreement

Traditionally it was said that the rules of duress and undue influence apply to cases where there is a lack of “consent” or “voluntariness” or where the promisor’s “will is overborne”.

In my view, all of these exceptions are questionable.

Universe Tankships Inc of Monrovia v International Transport Workers' Federation. The defendant trade union had ‘blacked’ the plaintiff’s ship import, and refused to release her except on payment of a large sum of money.

Lord Scarman discussed the legitimacy requirement as follows: “In determining what is legitimate two matters may have to be considered. And so the second question may have to be considered, namely, the nature of the demand which the pressure is applied to support.” It therefore appears that pressure may be illegitimate either Because the conduct which has been threatened is unlawful, for instance a threat to commit any crime or tort; or Because, even though the conduct which has been threatened is lawful, the way in which the pressure is exerted is illegitimate. the case if the advantage which is sought to be obtained by the threat is illegitimate.

The task of drawing the line between pressures which are legitimate and those which are illegitimate is of increasing importance because of the multitude of the pressures which are exerted in any competitive society.