Duress in Contract Law: Everything You Need to Know
Duress in contract law is focused on the concept of undue influence. 3 min read
2. Duress and Consideration
3. Contracts Entered Under Duress
4. Related Legal Terms
Duress in contract law is focused on the concept of undue influence. This means the use of false imprisonment, threats, force, psychological pressure, or coercion to influence someone to act in a way that is not in their best interest or to act in a manner they do not wish to act.
Overview of Duress in Contract Law
Compelling someone to act in a manner against their better judgment or to do something they don't want to do is against the law. In the eyes of the law, any agreement made by a person under duress is invalid.
When duress is being determined, it is not based on the pressure exerted on the person but by their state of mind. In a contract law court proceeding, in order for duress to exist, there must be an illegal or wrongful act. When a claim of duress is filed, it is because a party wants to prove that their agreement to a contract wasn't made in good faith, making the essential requirements necessary to form a contract unfulfilled. If a party is claiming duress because another party is threatening to file suit for more money, that would be an invalid reason because filing suit is a legal action.
A party fearing for their safety can file duress. An example would be threatening to harm someone's family if they refused to sign a contract. If a wrongful or illegal threatened act takes place, that qualifies as duress.
Duress and Consideration
Consideration is what is referred to when bargaining and exchanging takes place regarding goods and services. It is vital, and without it, a contract does not exist. When one party benefits but the other only receives what was initially promised, this is duress.
Checking if consideration was given is a quick way to determine if there is a claim for duress. When a promise is made, the promisor is legally bound. This does not constitute consideration. If both parties benefit, then consideration has been established and there is no claim for duress.
There are three consideration types:
- Past consideration.
In contract law, consideration need only be sufficient versus adequate. In this context, adequate is the value of the consideration in terms of the economic value of the transaction. This does not mean, however, that the validity of the consideration is affected. Legally, the only requirement is that the consideration has a minimum economic value.
Contracts Entered Under Duress
Duress to an Individual
When an individual enters into a contract because of threats to that person physically, then the contract may be set aside as long as the threat of physical violence was the reason the person entered into the contract. In this case, there is no need to establish that the party would not have entered into the contract had there been no physical threat.
Duress to Goods
Claiming duress due to goods is not recognized as a valid reason to set a contract aside.
Economic duress is a common claim in disputes of commercial contracts.
Proving duress in a contract requires three things be provided:
- There must be an existing continuous contract between the defendant and the plaintiff.
- The defendant has threatened to end the preexisting contract.
- The plaintiff under duress accepts and enters into the contract because of the threat.
Courts also look at other factors when determining if one party is exerting undue pressure on the other party. These factors include:
- The timeframe in place for each party regarding the completion of contract performance.
- The level of bargaining power each party had when the agreement was made.
- The mental state of each party at the time the agreement was made.
- Determining if each party felt the agreement was fair when it was made.
- If any contract modification were in place when the contract was agreed to.
- Whether other legal remedies provide reasonable solutions to the situation.
Related Legal Terms
- Civil lawsuit: When one person claims they've suffered a loss due to another person's actions.
- Mutual assent: A contract between two agreeing parties.
- A preponderance of evidence: When evidence by one party is more convincing than that of the other party.
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