When is duress a defense in a contract case?

Very rarely!

A party can argue that he does not have to perform a contract if he was forced to sign the contract.  A simple example would be if a salesperson pointed a gun at a customer and said, "Sign the contract or I'll shoot you."  Obviously that should not be a contract. The customer did not have a meaningful choice to sign the contract or not so he is not legally bound by his promise.

If one party makes an improper threat, and the other party does not have a choice, we say there was duress.  Sometimes an economic threat is less obvious than pointing a gun but can still be improper.  For example, let's say Mr. B is in a bad financial position and desperately needs his job to support his family.  Let's say Mr. A can cause Mr. B to lose his job.  Now Mr. A threatens Mr. B that if he does sign a contract t he'll cause Mr. B to lose his job.  This sounds like duress because Mr. B did not have a meaningful choice but to sign the contract and Mr. A improperly threatened to cause Mr. B to lose his job.

Don't confuse economic duress with someone trying to get the possible deal for himself.  If I own a classic car and I know you really want to buy the car I can demand that you pay as much as possible.  Yes, it might make you upset to pay so much money but you have a choice.  I'm not threatening you.  If you don't want to buy my classic car, buy a different one.

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