It is an accepted (although not necessarily popular) practise in the market place for some parties to flex their commercial muscle during contractual negotiations. This is especially prevalent during times of economic austerity. But be careful - there is an important difference between robust commercial negotiation and exerting illegitimate pressure, as shown in the recent case Progress Bulk Carriers Ltd v Tube City IMS LLC [2012] EWHC.

This was a shipping case where the freight company, Progress, concluded a charter with Tube to carry scrap metal on the Cenk K from the Mississippi River to China. Without informing Tube and in breach of contract, Progress used a different ship, causing Tube to suffer a loss because the end-receiver of the scrap metal demanded a reduction of US$8 per metric ton for, amongst other things, the late arrival of the goods. Progress and Tube negotiated and eventually Tube agreed that it would accept the substituted ship at a discount of US$2 per metric ton, but wanted to reserve its right in respect of all claims for loss and damages, including for the late arrival of the scrap metal. Progress agreed to accept the discount, but on the strict condition that Tube waived all claims for loss and damages. This was found in arbitration to be a "take it or leave it" offer that Tube had been forced to accept "under duress" because of severe time constraints imposed on them. The judge found that the conduct of Progress following the breach left Tube with no option but to accept the settlement agreement.

This is not a construction case, but the judgement is still important for the construction industry to note because it highlights the thin line between tough negotiations and applying illegitimate pressure.