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Contracts Ch. 3.D. Duress

Contracts Ch. 3.D. Duress. Duress: what threats are “improper”?. The Defense of Duress. Threats of Physical Harm or Imprisonment Threats of Contract Breach Enforceability of Contract Modifications Coercion and Reasonable Alternatives Threats of Economic Harm or Business Compulsion

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Contracts Ch. 3.D. Duress

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  1. ContractsCh. 3.D. Duress Duress

  2. Duress: what threats are “improper”?

  3. The Defense of Duress • Threats of Physical Harm or Imprisonment • Threats of Contract Breach • Enforceability of Contract Modifications • Coercion and Reasonable Alternatives • Threats of Economic Harm or Business Compulsion • Threats of Litigation Duress

  4. Defense of Duress • K law assumes parties act of own free will. Wrongful act or threat which overcomes free will amounts to duress. • Physical Threats as Inducement to Contract • Threat of harm is reason party entered into agreement. • Contract is VOID. (§174) • “Improper” threats as inducement [§§175-176] • Contract is VOIDABLE. • What is an “improper” threat? • Can the coercive use of superior bargaining power constitute an improper threat? • When is there no reasonable alternative? Duress

  5. Pre-Existing Duty Rule • Performance or promise to perform a pre-existing duty does not constitute consideration. • Bargain theory of consideration • Prevention of duress • Facilitation of fair bargaining • Modern trend? • “Reasonable modifications” Rest. (2d) §89 • “Good faith.” UCC 2-209. • Impact on Levine? Alaska Packers? Duress

  6. § 89. Modification Of Executory Contract A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or (b) to the extent provided by statute; or (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

  7. § 2-209. Modification; Rescission and Waiver • An agreement modifying a contract within this Article needs no consideration to be binding.

  8. § 1-304. Obligation of Good Faith. Every contract or duty within [the Uniform Commercial Code] imposes an obligation of good faith in its performance and enforcement. § 1-201(20) “Good faith,” except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing. • Is demand for an unfair modification in good faith?

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