If you’re involved with contracts, you should understand what it means to be under duress in contract law. This short article goes over the highlights that you should know.
What is Duress?
The idea of duress falls under the broader concept of undue influence. The concept is covered in depth by the American Bar Association, but the general idea behind duress in contract law is that someone is induced to act in a manner against their own free will. Essentially when someone claims to have been under duress regarding the agreement of a contract, they’re saying it wasn’t done in good faith.
Examples of Duress
A lot of times when someone files duress, they are fearing for their own safety or the safety of a loved one.
For example, maybe a company president received a threat that if they didn’t sign a contract, they would get hurt. This would be considered duress to an individual.
Another type of duress is called duress of goods. This is when one party holds the goods of another party until they enter into a contract. For example, let’s say that Company A pays Company B for a shipment of raw materials according to its existing contract. But instead of shipping the materials and abiding by the contract, Company B withholds the goods and asks for more money. They know Company A is in a tough spot and needs those materials ASAP, so they illegally revise the contract.
That last example is also skirting the line of economic duress. This is when one party intentionally creates a fear of great economic loss in the other party in order to get their way with the contract. This is causing the party to act outside of their own free will, so it qualifies as duress.
How to Prove Duress of Any Kind
Proving duress in a contract can be tricky, but can be done. Essentially three things need to be included.
- An existing continuous contract between the plaintiff and defendant
- The defendant threatened to end the preexisting contract
- The plaintiff – who was under duress – accepted and entered the new contract due to the threat
While the court digs into the case to understand if the contract is illegal due to duress, they will consider several things that include but aren’t limited to
- Each party’s timeframe to complete their part of the contract
- How much bargaining power each party had
- If any modifications were in place when the new contract was agreed to
- If other legal options are a better way to handle the situation
- Verifying if the parties felt that the contract was fair when it was first made
As we prepare for a case, we keep these things in mind and help our clients think through them as well as pull all relevant information for the case.
Duress in contract law is just one of several commercial law services we help clients with. If you have any questions about duress, contract law, or any other aspect of corporate law – give us a call at 714.456.9118 or send us an email at email@example.com. We’ll talk to you soon.