King v Foster

In *King v Foster*, the New South Wales Court of Appeal considered a dispute between the appellant, King, and the respondent, Foster, concerning the enforceability of a guarantee. The case arose from a loan agreement where Foster provided a guarantee for a company's debt to King.

The primary legal issue before the Court of Appeal was whether Foster's guarantee was vitiated by duress, specifically economic duress, at the time it was executed. King argued that Foster had voluntarily entered into the guarantee, while Foster contended that he was compelled to sign the guarantee under illegitimate pressure exerted by King, which amounted to economic duress.

The Court of Appeal analysed the principles of economic duress, noting that it requires proof of illegitimate pressure that was a significant cause inducing the plaintiff to enter into the contract. The Court examined the conduct of King and the circumstances surrounding the execution of the guarantee, including the financial position of the company and the nature of the demands made by King. Ultimately, the Court found that the pressure exerted by King did not amount to illegitimate pressure in the legal sense required to establish economic duress. The Court held that Foster had not been deprived of his free will and that the pressure, while significant, was within the bounds of commercial negotiation.

The appeal was dismissed, and the guarantee was held to be valid and enforceable.