What is the ratio in Pao On v Lau Yiu Long?

Economic duress requires coercion of will vitiating consent, not mere commercial pressure. Consideration must be real but need not be adequate, and practical benefits can support contract modifications.

What did the court decide in Pao On v Lau Yiu Long?

The Privy Council held that the renegotiated guarantee was valid because the commercial pressure did not amount to duress and there was sufficient consideration for the new arrangement.

Why is Pao On v Lau Yiu Long important for contract law?

It distinguished legitimate commercial pressure from economic duress and established flexible approaches to consideration, providing essential guidance for commercial contract modifications and business negotiations.

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