Inside Contract Law Chapter 4 pt 2

Duress and Free Will

• Definition of Duress: In legal contexts, duress can be described as a wrongful threat that overcomes an individual's free will.

  • There are different terms associated with duress (improper and wrongful); the choice of term may depend on preference of authority (professor, supervisor, or court).

  • Overcoming free will indicates a requirement for proof that the victim would have rejected the contract but for the threat.

• Key Consideration: Both parties involved in a contract are entitled to free will.

  • If one party is coerced into agreement, the other’s desires must also hold value.

Lack of Reasonable Alternatives

• Contractual Agreement: When an individual agrees to a contract under duress, it often stems from a desire to avoid threatened harm.

  • Having reasonable alternatives can negate claims of duress.

  • Legal options might be available as an alternative to accepting terms under duress.

  • Such options include filing lawsuits or seeking injunctions to prevent breaches.

  • Specific example: In Austin Instrument, a subcontractor threatened not to supply parts, potentially leading to serious penalties for the contractor based on government deadlines.

• Evaluation of Alternatives:

  • Suffering from the threatened harm may not be a legitimate alternative.

  • For example, if someone is threatened with financial loss, finding a way to cover the temporary loss may sometimes be a reasonable alternative.

Duress by Third Parties

• Duress can also occur through actions of third parties, mirroring the concept of misrepresentation by a third party.

  • The assent to a contract under threat does not reflect a mutual benefit.

• Court Considerations: A party can avoid the contract if criteria are met:

  1. The other party relied on the contract.

  2. The reliance was in good faith.

  3. The other party had no reasonable knowledge of the duress.

Physical Compulsion

• Physical compulsion is direct pressure applied to a party, and actions taken under such compulsion typically lack legal standing.

Mistakes Related to Contract Terms

• Types of Mistakes:

  • Basic assumption mistake: the parties may misinterpret contract fundamentals.

  • Misunderstanding: involves confusion regarding contract definitions.

  • Mistake of integration: signing based on assumed accuracy of written terms, where errors allow court intervention for reform.

  • Mistakes of judgment: regret after contract signing lacks legal remedy.

Duress vs. Preexisting Duty

• A party cannot claim consideration if they are bound to perform a duty already owed.

• There is a similar concept between duress claims and the erosion of the pre-existing duty rule—in both cases, determining acceptable boundaries between coercion and legitimate adjustments to contracts is complex.