Contract Law: Duress, Undue Influence, and Public Policy

Vocabulary flashcards covering the elements and defenses of duress, undue influence, and public policy exceptions under contract law.

Duress (Restatement (Second) of Contracts § 175(1))

A defense where manifestation of assent is induced by an improper threat that leaves the recipient with no reasonable alternative except to assent.

Improper Threat (Restatement (Second) of Contracts § 176(1))

A threat is improper if what is threatened is a crime or a tort, what is threatened is criminal prosecution, or the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient.

Austin Instrument, Inc. v. Loral Corp.

A key case illustrating economic duress, established when a party makes an improper threat (such as an unlawful threat to breach a contract) leaving the other party with no reasonable alternative.

Third-Party Duress (Restatement (Second) of Contracts § 175(2))

A rule governing situations where a contract is induced by an improper threat from a third party, under which the other contracting party is protected unless they had reason to know of the duress.

Undue Influence

Excessive persuasion exerted by a dominant party over a subservient or vulnerable party to induce assent to an agreement.

Restitution for Duress or Undue Influence

A legal remedy and claim available to recover value or restore parties to their original positions if a contract was induced by duress or undue influence.

Public Policy Grounds for Contract Invalidation

Categories of agreements that courts may refuse to enforce on public policy grounds, specifically including contracts affecting family relationships, exculpatory clauses, and non-compete agreements.

Regulatory vs. Revenue-Raising Licensing Statutes

A public policy distinction where contracts made without a required license are typically unenforceable if the statute exists to protect public health and safety, but may remain enforceable if the license is merely a revenue requirement.

Sheets v. Teddy's Frosted Foods, Inc.

A landmark case recognizing a public policy exception to at-will employment when an employee (quality control) is discharged for insisting on adherence to statutory standards and food labeling laws.