What Constitutes Duress in Contract Law?

by JR on May 16, 2013

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When a party enters into a contract under duress, he or she has experienced unlawful pressure in creating this contract. Ordinarily, the person would not enter into a contract under this sort of unlawful pressure. The person may be receiving threats or be experiencing harm that motivates the individual to enter into a contract. When a person is deprived of his or her independent will in deciding whether to enter into a contract, then this individual has experienced duress and may assert this as a defense.

Asserting a Defense of Duress

An individual will usually assert a defense of duress when he or she wishes to avoid liability for breaking the terms of a contract. A person may have signed a business contract in which a business is sold to another entity under duress. An individual may have also agreed to sell certain goods in a contract while he or she has experienced duress. These are two examples in which a person would be able to assert duress as a defense and be able to escape having to abide by the terms of a contract.

There are certain elements that must be met for an individual who wishes to assert a defense of duress. To prove duress, one must show that he or she has received a threat of serious harm to his or her body. The harm that is threatened must also be greater than the harm that actually results from the crime. An individual must be unable to escape a threat and must experience it in an immediate fashion. The defendant must also have no personal fault in entering into a contract under duress.

Two Types of Duress

There are two types of duress that an individual may experience when he or she enters into a contract; these are physical or economic duress. When a person is threatened to be injured or killed if he or she does not enter into a contract, then this is an example of physical duress. When an individual is threatened to have personal assets or funds taken if he or she does not enter into a contract, then this is an example of economic duress. To prove that economic duress has occurred, a party will need to show that the other party actually caused the distress that is experienced.

Duress may also occur when a party threatens to destroy a contract that is already in existence. There may be a preexisting contract between a plaintiff and a defendant. The plaintiff will need to show that the defendant has threatened to destroy the existing terms of a contract.

Examples of Threats that Cause Duress

There are many types of threats that can cause duress. When an individual experiences duress, he or she may receive a threat that involves blackmail or extortion of money. Or the threat may be to refuse to do business in the future with the individual. There may also be a threat to terminate an employment contract. A party may also threaten to commit a tort or crime against a family member.

If one party takes advantage of the weakness of another party, then this is a general instance in which duress will be found by a court. If a fiduciary duty is breached, then this is also another example in which duress may be found by a court.

To gather proof of duress, the injured party should find any letters or written communications that reveal duress has occurred. A court will take this sort of proof as solid evidence that duress has occurred in a given situation.

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Curtis Brandon writes on a range of financial and legal issues such as car insurance, banking, financial regulation, complex financial instruments, business law, contract law and other issues as well.

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