10.1: Duress and Undue Influence
- Page ID
- 143324
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)LEARNING OBJECTIVES
- Recognize that if a person makes an agreement under duress (being forced to enter a contract against his or her will), the agreement is void.
- Understand what undue influence is and what the typical circumstances are when it arises to make a contract voidable.
Duress
When a person is forced to do something against his or her will, that person is said to have been the victim of duress—compulsion. There are two types of duress: physical duress and duress by improper threat. A contract induced by physical violence is void.
Physical Duress
Physical duress occurs when a person is forced to enter into a contract because of the threat—or actual use—of physical harm. In other words, the person doesn’t truly agree to the contract; instead, their actions are compelled by fear for their safety.
The Restatement (Second) of Contracts, Section 174 explains:
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.
This means that if someone only “appears” to agree because they were forced, that agreement is not legally valid. Comment (a) to Section 174 further clarifies that when actual physical force is used, the person is essentially treated as a “mechanical instrument.” Since they never intended to agree, there is no contract at all. Lawyers call this a void contract (as opposed to a voidable one).
Although the Restatement points out that physical duress is rare, it does happen. When it does, the contract is invalid, and the person applying the force may also be guilty of a crime, such as extortion or assault.
Example:
Imagine that Tony threatens to break Chris’s arm unless Chris signs a contract selling his car for $1. Under physical duress, Chris signs the document. Since Chris’s “agreement” was forced by the threat of bodily harm, the contract is void—it has no legal effect. Chris is not bound by the terms, and Tony could face criminal charges.
Duress by Threat
The second type of duress is duress by threat, which is far more common than physical duress. In this situation, one party threatens the other, leaving the victim feeling like they have no reasonable alternative but to agree to the contract. Unlike physical duress (which makes a contract void), duress by threat makes a contract voidable—the victim can choose to cancel it.
To decide whether duress by threat exists, several elements must be present:
- The threat must be improper.
- Not every threat counts as duress. For example, threatening to sue someone for a legitimate reason is usually not improper. But threatening to commit a crime or misuse legal rights (like blackmail) is improper.
- There must be no reasonable alternative.
- If the victim has another option (such as buying goods from a different supplier or pursuing legal remedies), the threat might not qualify as duress.
- The test is subjective.
- The question isn’t whether a “reasonable person” would feel threatened—it’s whether the specific victim actually felt pressured and gave in. Courts look at things like the victim’s belief in the threatener’s ability to follow through and how quickly the victim agreed after the threat.
Types of Improper Threats
- Threats of bodily harm or destruction of property
- Threats to start criminal prosecution (in bad faith)
- Threats to bring civil lawsuits made in bad faith
- Threats to breach the duty of good faith in an existing contract
- Threats to reveal embarrassing personal information
Examples
Example 1: Threat of Violence
Jack buys a car from Mr. Olson, a used-car dealer. The next day, Jack realizes the car is a lemon. He threatens to smash the windows of Olson’s showroom unless Olson agrees to buy the car back for the full price. Olson, frightened and feeling he has no alternative, agrees. The repurchase contract is voidable because Olson only consented under an improper threat.
Example 2: Blackmail
Suppose Jack also knows that Olson has been tampering with odometers (a federal crime). Jack threatens to report Olson unless Olson repurchases the car. Even though Olson may be guilty, this misuse of the threat of prosecution makes the new contract voidable.
Example 3: Legitimate vs. Improper Lawsuit Threats
If Jack tells Olson, “I’m going to sue you to get my money back,” this is not duress—he has a legal right to do so. But if Jack threatens to file a false lawsuit claiming fabricated damages, that would be an improper threat and could make Olson’s agreement voidable.
Example 4: Threat to Breach a Contract
Olson agreed as part of the sale to cover repairs for 90 days. When the transmission fails after one month, Jack demands a replacement. Olson refuses unless Jack signs a new contract promising to buy his next car from him. If Jack has no funds and needs his car immediately, Olson’s threat could be improper, making the contract voidable. But if replacement transmissions are widely available and affordable, Olson’s demand may not amount to duress.
On the other hand, if unanticipated circumstances arise—say, Olson learns the replacement transmission costs three times more than expected—his refusal might be reasonable. In such a case, asking Jack to share the cost could be considered fair rather than improper.
Undue Influence
The Restatement (Second) of Contracts, Section 177 defines undue influence as “unfair persuasion.” It is considered a milder form of duress—not as extreme as threats or physical harm—but still powerful enough to make a contract voidable.
Undue influence occurs when someone improperly uses trust, power, or authority to persuade another person in a way that overcomes their free will. The victim may not realize they are being pressured because the persuasion happens in the context of a special relationship of trust.
Key Features of Undue Influence
- Domination or Trust: The victim is under the domination of the persuader or is justified in believing the persuader will not act in their best interest if they refuse.
- Isolation: The victim is often cut off from independent advice or guidance.
- Substitution of Will: The persuader’s goals replace the victim’s free choice.
- Voidable Contract: If undue influence is proven, the victim can void (cancel) the contract.
Common Situations
- A child pressuring an elderly or infirm parent into signing over property.
- A doctor persuading a vulnerable patient into an unfair financial agreement.
- A lawyer taking advantage of a client who does not understand the law.
What Courts Consider
Whether undue influence exists is a question of fact. Courts look at factors such as:
- The fairness (or unfairness) of the deal.
- Whether the victim had access to independent advice.
- The susceptibility of the victim (age, illness, lack of knowledge, or dependence).
Example
Sarah is 85 years old and relies heavily on her son, Tom, for daily care. Tom persuades Sarah to sign over her house to him, telling her it’s “for her own good” and discouraging her from speaking to her lawyer or friends about the decision.
Here, Tom has isolated Sarah and used their relationship of trust to substitute his own objectives for hers. This would likely be considered undue influence, making the contract voidable at Sarah’s option.
KEY TAKEAWAY
A contract induced by physical duress—threat of bodily harm—is void; a contract induced by improper threats—another type of duress—is voidable. Voidable also are contracts induced by undue influence, where a weak will is overborne by a stronger one.
EXERCISES
- What are the two types of duress?
- What are the elements necessary to support a claim of undue influence?