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Contracts • Defenses to Enforcement and Formation
K#071
Legal Definition
Contracts induced by duress usually involve obtaining assent by making an improper threat and are, thus, voidable. However, merely taking advantage of someone's economic need is not duress.
Plain English Explanation
Contracts are supposed to be willingly entered by two parties who intend to be bound by the terms of the contract. If one party forces another party to enter into a contract through threats of violence or force, then the contract will not legally have been formed.
Hypothetical
Hypo 1: Bob wants to hire a taco cart for his birthday. Sam owns a taco cart. Bob knows that Sam is currently broke and is desperate for work. Bob offers to hire Sam for his birthday, but only offers to pay half of what Sam usually charges. Sam doesn't want to agree to these terms, but he does anyway. Result: This is not duress. Using economic pressure may make Bob a bad friend, but it doesn't reach the level of "duress."
Hypo 2: Bob wants to hire a taco cart for his birthday. Sam owns a taco cart. Bob invite Sam over and places a contract in front of him that only offers Sam 50% of what he usually charges. Bob then puts a gun to Sam's head and says, "Sign it." Sam signs it. Result: Sam can use the defense of "duress" to argue that the formation of the contract is invalid as he was forced to sign under threat of death. This would allow Sam to not perform on the contract.
Hypo 2: Bob wants to hire a taco cart for his birthday. Sam owns a taco cart. Bob invite Sam over and places a contract in front of him that only offers Sam 50% of what he usually charges. Bob then puts a gun to Sam's head and says, "Sign it." Sam signs it. Result: Sam can use the defense of "duress" to argue that the formation of the contract is invalid as he was forced to sign under threat of death. This would allow Sam to not perform on the contract.
Visual Aids
Related Concepts
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