Duress, a legal doctrine that violates a contracting party's consent, is a complex and delicate area of contract law. It arises when one party to a contract exerts illegitimate pressure on the other, compelling them to agree to terms they would not have otherwise accepted. This pressure can take various forms, including physical threats, economic coercion, or undue influence.
Understanding the concept of duress is crucial for businesses and individuals involved in contract negotiations. By recognising the signs of duress and knowing how to respond, parties can protect their rights and avoid entering into contracts that are not truly consensual.
This article will help you understand:
Definition of duress
Types of duress
Legal consequences
How to prove duress in court
Steps to take if you signed a contract under duress
What is Duress?
Duress occurs when a person is forced into signing a contract through threats, coercion, or unlawful pressure. This undermines the principle of free consent, making the contract voidable by the affected party. It occurs when one party exerts undue pressure over another, making the other believe they have no choice but to enter into the contract.
What Happens if a Contract is Signed Under Duress?
A contract entered under duress may be voided or rescinded by the party coerced into signing it. Under contract law, Duress requires that some form of threat be made against another. It may be in the form of blackmail, threats of physical harm, threats to property, emotional torture, threats against family members, and many more. Evidence of such a threat must be duly presented to rescind the contract.
Types of Duress
Duress can take various forms in both personal and professional settings. Understanding the different types of duress is crucial for recognising unlawful pressures and safeguarding legal rights effectively.
Duress to the person: This involves threats of physical harm or harm to family members. This may force a person to sign a contract they ordinarily wouldn’t have signed. Duress to the person may involve a threat of physical harm, harm to reputation, or even imprisonment. The court may void such a contract or agreement if the individual can prove they were acting under duress. This means that the contract will be considered null and void, and neither party will be obligated to fulfil any obligations.
Duress to goods: This involves the threat of an unlawful destruction of property or confiscation of another’s goods. It's a threat against one’s properties and possessions. While this form is less common, the courts may recognise it as a form of duress in certain circumstances. The court may void the contract if a person can prove they were coerced into signing under duress to goods.
Economic duress: Involves threats to a person’s financial interests, such as an unjustified threat to breach a contract unless the other party agrees to new terms. Economic duress requires a high threshold of proof, showing that the victim had no realistic alternative but to agree to the contract.
It may also occur when a party threatens to cause economic losses to the other party, such as damaging their business or reputation. This may compel them to agree to terms they wouldn’t have otherwise accepted. Examples of economic duress include a threat to breach a binding contract, false or misleading representations, or threat of unethical or illegal behaviour.
Legal Consequences of Duress
Duress can throw a wrench into any legal agreement, raising serious questions about its validity. This quick look at the legal consequences of duress sheds light on the repercussions for contracts and decisions made under undue pressure.
Voidable Contracts
A contract signed under duress is not automatically void but is voidable. This means the party coerced into signing the contract has the right to rescind or cancel it. However, they must take action to void the contract; otherwise, it remains legally binding.
For voidable contracts, however, note the following.
Affirmation: If a coerced party continues to perform under the contract after the duress has ceased, they may be deemed to have affirmed the contract and waived their right to rescind.
Laches: The doctrine of laches may prevent a party from rescinding a contract if there’s a delay in bringing an action to void it. This means that if the coerced party waits too long to exercise their right to rescind, they may be barred from doing so.
Restitution: If a contract is voided due to duress, the parties may be required to restore each other to their original positions. This means any benefits received under the contract may need to be returned.
Rescission and Damages
If duress is proven, the contract can be rescinded, meaning it is treated as if it never existed. The party affected by duress may also be entitled to restitution, where any money or benefits exchanged under the contract are returned.
In addition to rescission, the party affected by duress may also be entitled to damages. Damages can be awarded to compensate for any losses suffered as a result of the duress. These losses may include:
Lost profits
Out-of-pocket expenses
Emotional distress
The amount of damages awarded will depend on the specific circumstances of the case and the evidence presented.
How to Prove Duress in Court
Certain elements must be proven to establish duress in the court. The claimant must convincingly demonstrate that:
There was illegitimate pressure or coercion, such as a threat of physical violence, property damage, or economic harm.
This illegitimate pressure was so severe and significant that it constituted a significant reason for the decision to enter the contract.
The victim had no choice nor reasonable alternative but to agree to the contract. This means they couldn’t have avoided the pressure or obtained the desired outcome through other means.
The court will also check to see if the threat of harm was imminent and unavoidable at that particular time. Otherwise, the court may decide that such a threat does not have enough ingredients to amount to duress.
It's important to note that proving duress can be challenging. The party alleging duress must be able to provide clear and convincing evidence to support their claims. Consulting with a legal professional can help you assess the strength of your case and determine the best course of action.
Factors Considered by the Courts
Courts will evaluate whether the pressure was unlawful or illegitimate. If it is discovered that it’s both, the court will declare the contract null and void.
The relative bargaining power of both parties will also be considered. Where a party has more power or influence over the other in a contract, there may be duress. Also, the court will consider whether the victim protested before signing the contract. Where the coerced party does not make their grievances known, then it may be difficult to prove duress afterwards.
Finally, the court will check whether the coerced party had realistic alternatives when signing, such as seeking legal advice or walking away from the negotiation. If the victim had these reasonable alternatives available, the court may be less likely to find that they were coerced.
Steps to Take if You Signed a Contract Under Duress
If you have been coerced into signing a contract, you must take the following steps as quickly as possible. Delay in appropriate legal action can result in the doctrine of laches blocking future actions. The court will decide that you have affirmed the contract’s legitimacy by withholding action. The legitimate actions to take are discussed below:
Seek Legal Advice: If you believe you signed a contract under duress, it is crucial to consult with a legal professional to evaluate the strength of your claim and explore your options. Also, should you decide to pursue an action in court, you would need a competent solicitor to represent you.
Document the Duress: Gather evidence of the coercion, such as emails, messages, or witness statements. Note that the evidence you present may make or mar your case. Only present evidence that is relevant to the case. Remember that the stronger your evidence, the more likely your case will succeed in court.
Take Action Quickly: In most cases, the right to rescind a contract due to duress must be exercised promptly. Delaying action could lead to the contract being affirmed, meaning you may lose the right to have it voided.
Best Practices for Avoiding Duress in Contracts
Ensure Fair Negotiation: Both parties should engage in fair and open negotiation, avoiding undue pressure or coercion. Legal advice should be sought before signing any contract that feels unfair or forced. A lawyer can help you identify and address any unfair or unfavourable terms in the contract. Furthermore, if negotiations are not going your way, be prepared to leave it immediately. It's a better option than accepting unfavourable terms.
Use Mediation: If disputes arise over the validity of a contract due to allegations of duress, mediation or alternative dispute resolution can help avoid costly litigation while reaching a fair resolution. Mediation also costs less than instituting full-scale litigation.
Legal and Regulatory Considerations
Common Law Principles: Duress in contract law is governed by common law principles in the UK. The law has evolved to recognise that economic duress can be in addition to physical duress. Both forms are valid reasons for voiding contracts.
Relevant Case Law: Courts have recognised claims of duress in cases such as Barton v Armstrong (1976), where threats of violence were used, and The Atlantic Baron (1979), which involved economic duress. These cases help illustrate the boundaries of what constitutes duress.
FAQS
What is considered duress in contract law?
Under contract law, duress occurs when a person is forced into signing a contract through threats, coercion, or unlawful pressure. This undermines the principle of free consent, making the contract voidable by the affected party.
Can economic pressure void a contract?
Yes, economic pressure can void a contract. This is referred to as “economic duress.” It involves threats to a person’s financial interests, such as an unjustified threat to breach a contract unless the other party agrees to new terms.
How can I prove that I signed a contract under duress?
Certain elements must be present to prove duress in the court. You must convincingly demonstrate that:
There was illegitimate pressure or coercion, such as a threat of physical violence, property damage, or economic harm.
This illegitimate pressure was so severe and significant that it constituted a significant reason for the decision to enter the contract.
You were left with no choice nor reasonable alternative but to agree to the contract. This means they couldn’t have avoided the pressure or obtained the desired outcome through other means.
What happens if a contract is signed under duress?
If a contract is signed under duress, it may be void or voidable. This means that the party who was coerced into signing the contract has the option to rescind or cancel it.
What legal remedies are available if I were coerced into signing a contract?
If you believe you were coerced into signing a contract, you may have several legal remedies available. These remedies can vary depending on the specific circumstances of your case, the type of duress involved, and the jurisdiction in which the contract was signed.
Some of the most common remedies are:
Rescission
Restitution
Damages
Injunctions.
Conclusion
Under contract law, duress emerges as a formidable challenge to free consent. It is a complex legal doctrine that requires careful consideration and expert analysis. Understanding the elements of duress, the potential consequences, and the available remedies is crucial in protecting your interests. This way, individuals and businesses can protect their rights and avoid entering into contracts that are not truly consensual.
If you believe you have been a victim of duress, seeking legal advice from qualified professionals is crucial. Our commercial lawyers and experts at Lawhive possess the expertise and experience to assess your situation, provide tailored guidance, and effectively represent your interests.