LAW 505-002 – Contracts I
If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent.
- If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.
- If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.
When a Threat Is Improper
- A threat is improper if
- what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property,
- what is threatened is a criminal prosecution,
- what is threatened is the use of civil process and the threat is made in bad faith, or
- the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient.
- A threat is improper if the resulting exchange is not on fair terms, and
- the threatened act would harm the recipient and would not significantly benefit the party making the threat,
- the effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or
- what is threatened is otherwise a use of power for illegitimate ends.