⚡ 10-Second Rule
A deal forced by a wrongful threat, with no real way out, can be canceled by the victim.
🧒 ELI-10 Scene
At recess, big Marco corners Theo. "Trade me your new soccer ball for my old one, or I'll smash your science project tonight." Theo hands over the ball. Did Theo really agree? His mouth said yes, but the threat did the choosing. Now picture worse: Marco grabs Theo's hand and physically drags it to sign a trade sheet. That second one isn't even Theo's promise — Marco basically signed it himself. Teachers treat the two differently, and so do courts.
⚖️ Actual Rule
Under the Restatement (Second) of Contracts § 175 (paraphrased), a contract is voidable by a victim whose assent was induced by an improper threat that left no reasonable alternative. Section 176 (paraphrased) catalogs improper threats: threats of crime or tort, of criminal prosecution, of bad-faith use of civil process, and of breaching an existing contractual duty of good faith and fair dealing. Economic duress is a narrow branch: a bad-faith threat to breach an existing contract qualifies only when the victim has no reasonable alternative — no adequate substitute performance available on the market and no adequate legal remedy in time. Hard bargaining, market pressure, and a party's own financial distress not caused by the other side do not constitute duress. Under Restatement § 174 (paraphrased), conduct that appears to be assent but is physically compelled — a hand forced across the signature line — is no assent at all, and the resulting "contract" is void, not merely voidable. Undue influence, Restatement § 177 (paraphrased), is the softer cousin: unfair persuasion of a person who is under the persuader's domination, or who justifiably assumes the persuader will act in their welfare because of a relationship of trust; the resulting contract is voidable by the victim.
ELI-10 translation: a wrongful threat with no exit lets the victim cancel; forced hands mean no promise ever existed.
🔍 Ask These Questions
- Was there a threat, and was it improper — a threatened crime, tort, prosecution, or bad-faith breach? (Did someone promise to do a wrong thing unless the deal happened?)
- Did the threat leave no reasonable alternative — no substitute supplier, no timely legal fix? (Was there truly no other door out of the room?)
- Did the threat actually induce the assent? (Did the scare, not free choice, make the person say yes?)
- Was the compulsion physical — a forced hand or signature? (If muscles were forced, there was never a promise at all — the deal is void.)
- If no threat, was there undue influence — unfair pressure inside a trust or dominance relationship? (Did someone the victim leaned on push them into it?)
- Sort the remedy: threats and influence make the deal voidable; physical force makes it void. (Scared promises can be canceled; forced hands never made a promise.)
⚠️ Bar Trap
Exam language: Examiners dress ordinary commercial leverage as duress — a supplier charging what a desperate market will bear, or a buyer exploiting a seller's self-inflicted cash crunch — and invite you to void the contract. Economic duress requires both an improper threat, typically a bad-faith threat to breach, and the absence of any reasonable alternative such as a substitute source or adequate legal remedy.
ELI-10: Driving a hard bargain is allowed. A tough price from the only seller in town is not duress. Duress needs a wrongful threat plus a locked room with no other exit.
🧪 Question
A theater company contracted with a set builder to construct custom stage sets for $40,000, delivery one week before opening night of a sold-out run. Ten days before delivery, with the sets nearly complete, the builder told the company, "Pay an additional $15,000 or I walk and you get nothing." No other builder could produce replacement sets in time, and a suit for breach could not be resolved before opening night. The company signed a modification agreeing to the additional $15,000, took delivery, and after the run closed sued to avoid the modification and recover the $15,000.
Will the company prevail?
(A) No, because the company signed the modification voluntarily and accepted the sets. (B) No, because a party is always free to demand renegotiation of price before performance is complete. (C) Yes, because the builder's bad-faith threat to breach left the company no reasonable alternative, making the modification voidable. (D) Yes, because any agreement obtained by duress is void and requires no election to avoid.
Answer: (C). The builder made an improper threat — a bad-faith threat to breach an existing contractual duty — and the company had no reasonable alternative: no substitute builder existed and litigation could not remedy the harm in time. The modification is therefore voidable for economic duress, and the company may avoid it and recover the extra payment.
💡 Why the Wrong Answers Are Wrong
- (A) mistakes outward assent for free assent; signatures induced by improper threats are precisely what the duress doctrine unwinds.
- (B) confuses lawful renegotiation with a bad-faith holdup; demanding more by threatening to breach when the other side is cornered is improper.
- (D) overstates the remedy: threat-induced duress renders a contract voidable at the victim's election, and only physically compelled assent is void.
- ELI-10: The misconception is thinking all pressure counts, or that all duress erases the deal. Only wrongful threats with no exit count, and the victim must choose to cancel.
