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Understanding Duress and Undue Influence

May 10, 2025

Lecture Notes: Duress and Undue Influence

Overview

  • Topic: Defenses to Contract Formation
  • Focus on Duress and Undue Influence
  • Part of a broader framework:
    • Formation
    • Interpretation
    • Breach of Contract
    • Remedies
  • Current focus: Defenses to Formation

Defenses to Formation

  • Previous Topics:
    • Statute of Frauds: Acts as a defense if not complied with.
    • Incapacity: Lack of legal ability to enter into a contract.
  • Current Topics: Duress and Undue Influence

Duress

  • Definition: Coercing a party into an agreement via improper threats.
  • Types:
    • Physical Duress
    • Economic Duress
  • General Rule: Contract is voidable if a party is induced by an improper threat with no reasonable alternative.

Elements of Duress

  1. Inducement
    • About causation: Was the victim's acceptance caused by the threat?
    • Subjective standard: Was the particular person's will overcome?
  2. Improper Threat
    • Includes crimes, torts, or threats of such actions.
    • Threat of criminal prosecution or bad faith civil lawsuit.
    • Breach of duty of good faith and fair dealing.
  3. No Reasonable Alternative
    • Evaluates the gravity of the threat and available options.
    • Reasonableness judged by facts and circumstances.

Types of Duress

  • Physical Duress
    • Contract is void.
    • Example: Threat of physical harm (e.g., gun to the head).
  • Economic Duress
    • Contract is voidable.
    • Example: Coercion through financial threats.

Undue Influence

  • Definition: Unfair or excessive persuasion of someone susceptible to such pressure.
  • Elements:
    1. Inducement
      • Caused by unfair persuasion.
    2. Unfair Persuasion
      • Factors include inappropriate time/place, insistent demands, lack of third-party advisors.
    3. Undue Susceptibility
      • Weakness of mind or special relationship.
    4. Inequitable Result
      • Consider economic consequences, divergence from prior course, and value inequity.

Examples

  • Physical Duress: Barb threatens Bob with a gun to sell his house.
  • Economic Duress: Herman pressures Bob to buy more chocolates by withholding current delivery.
  • Undue Influence: Bo pressures a sick Bob to sell his car by intruding into private space and insisting on a quick decision.

Conclusion

  • Understanding these defenses helps in evaluating the validity and enforceability of contracts.
  • Future topics will include more defenses and excuses to performance.

Full transcript