#consideration #contract

Facts: Petroleum Geo Services ('PGS') engaged DSND Subsea Limited ('DSND'), a professional diving operation, to carry out works in the North Sea constructing subsea structures. The contract was based on an assumption that the risers (pipes used to transfer produced fluids from the seabed to the surface facilities or lift gas), would have already been installed by PGS. DSND was to have full responsibility for the rest of the subsea system. Later, it transpired that the risers would have to be installed after the subsea system was in place. DSND was concerned about several issues and in particular, about the insurance that was in place. They thought that they would not be covered if they proceeded with the installation without further changes to the insurance and refused to continue with the work. Eventually, a memorandum of understanding ('MOU') and a memorandum of agreement ('MOA') were entered into which set out various changes to DSND’s payment and acknowledged that the risers were to be installed after the subsea system which brought DSND within insurance cover. After the risers were installed, PGS then informed DSND the contract was terminated on the basis of DSND's 'serious breach of contract'. PGS argued that both the MOU and MOA should be set aside for economic duress. The economic duress point was considered as a preliminary issue by the court.

DSND Subsea Limited (Formerly known as DSND Oceantech Limited) v Petroleum Geo Services ASA, PGS Offshore Technology AS [2000] BLR 530