Contracts

Abuse of Power

Duress

It comes up when one party says they only signed the contract because the other side pressured them into it. To rescind for duress you need two things: illegitimate pressure, and that the pressure actually compelled the victim's will so that they entered the contract ().

Illegitimate pressure

The first thing to ask is whether the pressure was illegitimate. This is a narrow idea. It's limited to threatened or actual unlawful conduct (). Once you've found unlawful conduct, work out which category it falls into:

1. Duress of the person: a threat of assault or false imprisonment. For example, threatening to kill someone unless they sign a document is duress of the person ().

2. Duress of property: threatened damage to, destruction of, or unlawful seizing or detaining of the plaintiff's goods ().

3. Economic duress: a threatened unlawful interference with the plaintiff's financial or economic interests ().

For economic duress in particular, keep in mind that mere commercial pressure, even really overwhelming pressure, or just unequal bargaining power, is not enough. The pressure has to be unlawful (). Say a supplier just drives a hard bargain because it knows you're desperate for stock, that alone won't cut it. However, an actual or threatened breach of contract does count as unlawful conduct for this purpose ().

Causation

Illegitimate pressure alone isn't enough. It also has to have compelled the victim's will, causing them to enter the contract. It doesn't need to be the only reason they signed, just one of the reasons. Once the victim shows the pressure was illegitimate, the burden flips: the party who applied the pressure then has to show it made no contribution to the victim entering the contract (; ).

The question isn't whether the victim had another option, it's whether the choice between options was made freely or under pressure (). In practice, the more reasonable alternatives the plaintiff had available, the easier it is for the defendant to argue the plaintiff really acted voluntarily.

Remedy

If duress is made out, the contract isn't automatically void. It's voidable, meaning the pressured party can choose to rescind it.