CTN Cash & Carry Ltd v Gallagher Ltd [1994] 4 All ER 714
Economic duress; monopolies
(276 words)
Facts
CTN contracted with Gallagher for the purchase of cigarettes. Gallagher delivered the cigarettes to the wrong address where they were stolen before Gallagher could rectify the mistake.
Issues
Gallagher demanded CTN to pay for the cigarettes despite those not being delivered due to Gallagher’s own mistake. Gallagher argued that the risk had passed to CTN already when the goods were delivered to the (wrong) warehouse. Gallagher threatened to stop CTN’s credit facilities for future dealings if CTN failed to pay. To prevent the loss of its credit facilities CTN paid. However, CTN sued for repayment on grounds of economic duress – in other words, CTN was of the view that the contract was voidable due to duress and inequality of bargaining power.
Decision/Outcome
The Court found against CTN. There is no doctrine of inequality of bargaining power in the commercial context under common law, so cases have to be decided on their individual facts. The Court based its decision on three factors here. First, the agreement/dealings in question took place between two commercial entities, two companies, and not between a supplier and a consumer. Second, Gallagher had the right to refrain from future dealings with CTN for any reason it chose. Thus, because a decision to discontinue dealings with CTN was lawful, it was also lawful for Gallagher to threaten CTN with credit withdrawal in the absence of payment of an invoice that was already due. Third, and most important, Gallagher acted in good faith when it demanded payment from CTN – it genuinely felt entitled to the payment. In the absence of malice or any other form of bad faith, economic duress could not be established.
Updated 19 March 2026
This case summary remains legally accurate. CTN Cash & Carry Ltd v Gallagher Ltd [1994] 4 All ER 714 is still good law and continues to be cited in English contract law for the proposition that there is no general doctrine of inequality of bargaining power in commercial dealings under common law, and that a threat to do something lawful does not ordinarily constitute economic duress. The three factors identified by the Court of Appeal (commercial parties, lawful act, good faith belief in entitlement) remain relevant to the analysis of lawful act duress in subsequent case law. Readers should note that the broader area of lawful act duress has developed since 1994: in particular, the Supreme Court in Times Travel (UK) Ltd v Pakistan International Airlines Corporation [2021] UKSC 40 confirmed that lawful act duress is a recognised but narrow doctrine in English law, and clarified the role of good faith and illegitimate pressure within it. The decision in CTN itself was not overruled and remains consistent with the Supreme Court’s analysis, but students should read Times Travel alongside this case for a complete picture of the current law on lawful act duress.
