Tag: duress

economic duress

How does Economic Duress affect a contract?

Posted on by admin in transaction advisory

Economic duress is a legal concept that arises in the context of contract law. It refers to a situation where one party to a contract is forced to enter into or modify the terms of a contract due to economic pressure or coercion exerted by the other party. The party claiming economic duress typically has no reasonable alternative but to agree to the terms imposed on them.

In order to prove economic duress, the victim must establish that the other person acted improperly or illegally. Because duress rests on pressure rather than an absence of consent, the nature of the pressure is crucial in determining whether duress has occurred. As some sorts of pressure are legitimate, you must show that the pressure was unlawful.

The victim should also establish that improper or illegal conduct caused them to be afraid of economic hardship and the fear of hardship prevented him or her from engaging in a commercial agreement with free will.

ELEMENTS OF ECONOMIC DURESS

To win a case, you must generally establish the following elements:

  1. Unlawful or wrongful conduct: The party alleging economic duress must show that the other party engaged in some form of wrongful behaviour or acted unlawfully. This can include threats, blackmail, fraud, or other coercive tactics. See S.P.D.C.N. Ltd. v. Nwawka (2003) 6 NWLR (Pt. 815) 184, C.C.C. ThriftCredit Society v. Ekpo (2001) 17 NWLR (Pt. 743) 649.
  2. Lack of reasonable alternatives: The party under duress must demonstrate that they had no meaningful choice but to agree to the contract or modify its terms. They must show that they were facing financial hardship or other circumstances that left them with no viable alternatives.
  3. Causation: There must be a direct link between the wrongful conduct of the other party and the coerced agreement. The party alleging economic duress must show that the wrongful behaviour directly led to their acceptance of the contract or modification.

If economic duress is successfully proven, the affected party may seek remedies such as rescission (cancelling the contract), damages, or the enforcement of the contract under revised terms. However, it’s important to note that the specific legal standards and remedies for economic duress can vary depending on the jurisdiction and the particular facts of the case. It is advisable to consult with a legal professional for guidance tailored to your specific situation.

duress

Economic Duress

Posted on by admin in entrepreneurship, Small Businesses, transaction advisory, wealth
duress

Duress can be described as an illegal threat or intimidation that induces another person to perform actions that he would otherwise not perform.

Initially, the doctrine of duress was limited to actual or imminent violence. Over the years, this theory has grown to include different types of hardship. These include economic hardship, the threat to seize or detain goods, the threat to land, and the threat to trade or industry.

Generally, a contract can be voided by one of the parties on grounds of Duress, undue, influence and unconscionable dealing. This is because his/her consent was obtained by conduct which the law considers unacceptable. As a result, the law presumes that there is no valid consensus, which would form a valid contract.

Economic Duress

Economic duress in contracts occurs where a party to a contract threatens to cancel a contract unless the other party agrees to their demands. This usually happens when the other party is stuck, and has no other practical options but to agree to the new terms of the contract. If you can prove you were forced into a contract through economic pressure, you can claim that you did not enter the contract on your free will.

 It is an established law that economic pressure can in law amount to duress. This duress, if proved, does not only render the transaction voidable. It may also be actionable as a tort, if it causes damage or loss. In other words, you are under duress when you have no choice, forcing you to agree to another party’s terms.

In Pao On v. Lau Yiu Long, the courts observed that the basis of duress does not merely depend upon the absence of consent. It requires the combination of pressure and absence of practical choice. In this context, two questions become all-important. The first is whether the pressure or threat is legitimate; and secondly, its effect on the victim.

To establish economic duress, you need to prove two universally accepted elements. These are, the exertion of illegitimate pressure by one party on the other; and significant causation i.e. a significant cause compelling or pressurizing the other party to act as he did.

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