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.

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