1. What is Coercion of Contract?
2. How Does Coercion Effect a Contract?
3. Defending Against Coercion
4. Do You Need a Lawyer to Help With Coercion?
5. Contracts That Are Unenforceable

Coercion in law of contract means threats or actual harm was used to force someone into entering into a contract. If coercion is involved in the formation of a contract, the agreement will not be legally enforceable.

What is Coercion of Contract?

For a contract to be legally enforceable, both parties must have willingly entered into the contract. On the other hand, if one party was coerced into the contract, meaning threats were used to obtain their acceptance, the contract is not valid. This rule related to coercion applies both to specific terms in a contract and the contract as a whole. Basically, this means that contracted parties must agree to the entire contract and must also agree to all the individual terms.

How Does Coercion Effect a Contract?

If it is discovered that coercion was involved in the formation of the contract, the agreement will almost always be rescinded. When contract rescission occurs, the entirety of the agreement is canceled. Both parties are released from their responsibilities as defined in the contract.

Defending Against Coercion

The idea of ‘unclean hands' is a defense that can be used for coercion in a contract. The general idea behind unclean hands is that one party can't be held liable for coercion because the other party was guilty of the same act. Another way to understand this idea is that both parties coerced each other in order to form the contract.

Despite the fact that both parties are guilty of coercion, the contract would still be canceled. No coercion can exist in a legal contract. It's possible for one party to get out of their contractual obligations by claiming coercion. One party could state that since coercion occurred, they should not be forced to perform the contract.

Do You Need a Lawyer to Help With Coercion?

Contract law, whether it's at the federal or state level, can be very complicated. If you've signed a contract but now believe that coercion was involved, it may be a good idea to consult with a business lawyer. An attorney can examine the circumstances around the formation of the contract and can determine whether or not you were coerced into signing the agreement.

If there was coercion, and you decide to file a court case to terminate the contract, your attorney can be of assistance here as well.

Contracts That Are Unenforceable

A contract is a type of legally binding agreement. This means that once you enter into a contract, you are legally required to perform your contractual duties. The exception to this rule is if you can prove that the contract is legally unenforceable.

Several different situations can create an unenforceable contract. One of the most common reasons that a contract would be unenforceable is that one of the parties did not have legal capacity. Lack of capacity means that a person is incapable of entering into a contract, whether they are under the majority age or have some kind of mental impairment.

Entering into a contract under duress, which is a type of coercion, will make the contract unenforceable. For instance, if you purchase a product from a company, and the company refuses to complete the delivery until you give them more money, this would be a form of duress.

While lack of capacity and coercion are two of the most common reasons a contract would be unenforceable, several other situations may remove a contract's validity, including:

  • Undue Influence: This occurs when one party takes advantage of another, usually because there is a special, preexisting relationship between the two parties. For instance, if a parent pressures their adult child to enter into a contract, this could be undue influence.
  • Misrepresentation: If misrepresentation occurs during the process of contract negotiation, such as making false statements about the quality of a product, it may not be possible to enforce the contract.
  • Nondisclosure: Sometimes, misrepresentation occurs because one party has not disclosed important information to the other party. Nondisclosure will often result in a contract being unenforceable.
  • Unconscionability: If a contract includes terms that would be considered completely unfair, the contract cannot be enforced.

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