If a company fails to honor the contract does that make it void?
Full Question:
Answer:
The answer is a matter of subjective determination for the court, based on all the facts and circumstances involved. Duress is defined as the constraint of another’s will so that he is forced to give consent when he is not in reality willing to do so. Duress must destroy the free will of a party and cause him to do an act or form a contract not of his own volition. The alleged coercive event must be of such severity, either threatened, impending, or actually afflicted, so as to overcome the mind and will of a person of ordinary firmness. Duress is viewed with a subjective test, looking at the individual characteristics of the person allegedly influenced, and duress does not occur if the person has a reasonable alternative to succumbing and fails to avail themselves of the alternative.
“Duress of goods” refers to unlawfully seizing or withholding property, or threatening to do so, until some demand is met. The more modern concept is called "economic duress." The elements of economic duress include the following:
-Wrongful or improper threat: The precise definition what is wrongful or improper is judged by the facts in each case. Examples include: morally wrong, criminal, or tortuous conduct; a threat to breach a contract "in bad faith" or threaten to withhold an admitted debt "in bad faith".
-Lack of reasonable alternative. If there is an available legal remedy, an available market substitute (in the form of funds, goods, or services), or any other source of funds, this element is not met.
-The threat is the actual cause of entering into the contract. This is a subjective standard, and takes into account the victim's age, their background (ex. business sophistication, education), relationship of the parties, and the ability to obtain advice.
-The other party caused the financial distress. The majority opinion is that the other party must have caused the distress, while the minority opinion allows them to merely take advantage of the distress.