Defenses to enforceability - Duress and undue influence

Learning Outcomes

This article explains how duress and undue influence operate as defenses to contract enforceability on the MBE, including:

• Recognizing when apparent assent is vitiated by physical compulsion, improper threats, or unfair persuasion rather than ordinary bargaining.
• Distinguishing physical duress, economic duress, and undue influence, and articulating the elements of each doctrine for exam analysis.
• Evaluating economic duress scenarios involving bad‑faith threats to breach existing contracts, wrongful withholding of performance, and lack of reasonable alternatives.
• Determining when duress exerted by third parties permits the victim to avoid the contract against the other party or an assignee with notice.
• Assessing whether a given agreement is void or voidable, and identifying which parties may seek rescission, restitution, or continued enforcement.
• Identifying confidential or fiduciary relationships and applying indicia of overpersuasion that support a finding of undue influence in MBE hypotheticals.
• Analyzing timing, conduct, and post‑pressure behavior to determine when a voidable contract has been affirmed or ratified, cutting off the defense.
• Applying these rules to multiple‑choice questions, separating genuine duress or undue influence from mere hard bargaining, unequal leverage, or lawful threats.
• Comparing duress and undue influence with other formation defenses so you can select the most precise answer choice under time pressure.

MBE Syllabus

For the MBE, you are required to understand when a contract may be set aside because the promisor’s will was overborne, with a focus on the following syllabus points:

• Duress as a formation/enforcement defense and its elements
• Physical compulsion versus improper threats (including economic duress)
• Duress exerted by third parties and the knowledge of the other contracting party
• Undue influence: relationships of trust and unfair persuasion
• Consequences: void versus voidable contracts, rescission, and ratification

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which of the following is most likely to render a contract voidable?
   1. A party enters a contract after being threatened with lawful litigation.
   2. A party signs a contract after being threatened with immediate physical harm.
   3. A party is persuaded by a friend to accept a low offer.
   4. A party is offered a better deal by a competitor.
2. Undue influence generally involves:
   1. A threat of violence.
   2. A misrepresentation of law.
   3. Abuse of a position of trust to gain an unfair advantage.
   4. A mistake about price.
3. If a contract is entered into under economic duress, the typical remedy is:
   1. The contract is automatically void.
   2. The contract is voidable at the option of the pressured party.
   3. The contract is enforceable regardless of duress.
   4. The contract is enforceable only if in writing.
4. A threatens to file baseless criminal charges against B’s spouse unless B signs a guarantee of A’s business debts. A creditor, C, later takes assignment of the guarantee, knowing how it was obtained. As between B and C, the guarantee is:
   1. Enforceable because the threat was not against B personally.
   2. Enforceable because the threat involved criminal rather than economic harm.
   3. Voidable by B because C had notice of the duress.
   4. Void, so neither A nor C can ever enforce it.

Introduction

Contract law requires real, voluntary assent. Even when all the usual elements of contract formation are present—offer, acceptance, and consideration—a party may avoid the agreement if their apparent consent was produced by illegitimate pressure or manipulation.

Two central defenses in this area are duress and undue influence. Both look at the process by which agreement was reached rather than the substantive fairness of the bargain (although an unfair result is often evidence of a problem). For MBE purposes, you must be able to:

• Spot when a “hard bargain” is still valid
• Recognize when pressure crosses the line into an improper threat (duress)
• Recognize when persuasion becomes abusive because of a special relationship (undue influence)

Key Term: Duress
The use of an improper threat or actual compulsion to induce a party’s assent, depriving that party of a meaningful choice whether to contract.

Key Term: Physical Duress
Duress where a party’s signature or assent is obtained by physical compulsion or a threat of immediate physical harm.

Key Term: Economic Duress
A form of duress in which wrongful or unlawful economic pressure leaves the victim with no reasonable alternative but to agree to the contract or modification.

Key Term: Improper Threat
A threat to do something criminal, tortious, or in bad faith (such as threatening baseless criminal charges or breaching a contract in order to extract a better deal).

Key Term: Void Contract
An agreement with no legal effect from the outset; it cannot be enforced by either party.

Key Term: Voidable Contract
A contract that is otherwise valid and enforceable but that the aggrieved party may affirm or rescind because of a recognized defense such as duress or undue influence.

Key Term: Undue Influence
Unfair persuasion exerted by a party who dominates the will of another or who stands in a relationship of trust, resulting in a transaction that does not reflect the influenced party’s free and independent judgment.

Key Term: Confidential or Fiduciary Relationship
A relationship (such as attorney–client, trustee–beneficiary, doctor–patient, or sometimes close family or caregiver relationships) in which one party reasonably places trust and confidence in another.

Key Term: Rescission
The usual remedy for a voidable contract: the contract is set aside, the parties are restored as far as possible to their pre‑contract positions, and any benefits are returned.

Key Term: Ratification
The voluntary decision by the aggrieved party to affirm a voidable contract after the duress or undue influence has ended, thereby losing the right to avoid it.

With these concepts in place, the rest of this article deepens the rules and MBE applications.

Duress

Duress arises when a party’s assent is induced by an improper threat that leaves the victim no reasonable alternative but to agree. The law distinguishes among:

• Physical duress - Duress by improper threats (including economic duress) - Duress exerted by third parties

Types of Duress and Their Effects

1. Physical duress

   Physical compulsion or threats of immediate physical harm render the contract void, not merely voidable.

   • For example, forcing someone’s hand to sign, or signing at gunpoint, is physical duress.
   • Because there was no genuine assent at all, no subsequent ratification by conduct is recognized; a truly void contract is never effective.

2. Duress by improper threats (including economic duress)

   In the more common form, one party threatens an unlawful act or acts in bad faith to gain agreement. These contracts are voidable at the victim’s option, not automatically void.

   Common “improper threats” include:

   • Threats of crime or tort (e.g., “Sign or I will burn your warehouse”)
   • Threats to bring criminal charges to gain a civil advantage (e.g., “Sign or I’ll swear out a criminal complaint I know is baseless”)
   • Threats to institute civil proceedings made in bad faith (e.g., threatening a baseless civil suit)
   • Bad‑faith threats to breach an existing contract where the other party has no realistic alternative in time

   By contrast, lawful threats are not duress:

   • A genuine threat to sue on a valid claim
   • A threat to refuse further business dealings in the future
   • Tough negotiation where the threatening party is merely insisting on her legal rights

   On the MBE, the examiners frequently test whether the specific threat is wrongful or whether it is simply aggressive bargaining.

3. Economic duress

   Economic duress is a subset of improper-threat duress focused on financial pressure. Most courts—and the MBE—require:

   • A wrongful or improper threat to the victim’s economic interests (often a bad‑faith threat to breach an existing contract or withhold something the victim is entitled to)
   • The threat actually induced assent
   • The victim had no reasonable alternative, such as obtaining goods or financing elsewhere or suing in time to avoid serious loss

   Merely taking advantage of another’s poor financial condition is not enough. A buyer’s need for cash, standing alone, does not create economic duress if the other party is not threatening anything wrongful.

   Typical MBE patterns:

   • A supplier threatens not to deliver goods it is already contractually obligated to deliver unless the buyer agrees to a higher price and the buyer cannot timely cover elsewhere.
   • An employer threatens to fire an employee unless the employee signs an unfair release, where unemployment would be catastrophic and no comparable job is reasonably available.

   In these situations, if the elements above are satisfied, the modification or contract is voidable by the coerced party.

4. Duress by third parties

   Sometimes the coercion is applied by someone who is not the other contracting party. In that case:

   • If the other contracting party knew or had reason to know of the duress, the victim may avoid the contract (it is voidable).
   • If the other contracting party did not know and had no reason to know of the duress and gave value in good faith, the contract is generally enforceable against the victim. The victim’s remedy lies against the wrongdoer, not the innocent party.

   On the MBE, watch whether the non‑coercing party had notice of the duress. That often determines whether the contract can be avoided against that party.

Elements of Duress

To establish duress as a defense, the pressured party must show:

• An improper threat (physical, economic, or otherwise wrongful)
• The threat induced assent—it was a substantial reason the party agreed
• The victim had no reasonable alternative but to agree at the time

If these elements are met:

• Physical duress ⇒ contract is void
• Other duress ⇒ contract is voidable at the victim’s option

The victim may seek rescission and restitution (return of any benefits conferred). If the victim instead chooses to perform or accept benefits after the pressure ends, that conduct may amount to ratification, cutting off the defense.

Undue Influence

Undue influence addresses cases where the problem is not a threat, but unfair persuasion in the context of a relationship where one party reasonably trusts the other.

Key Term: Undue Influence
Unfair persuasion of a party who is under the domination of another or in a relationship of trust, such that the resulting contract does not reflect the influenced party’s free, independent judgment.

Unlike duress, undue influence does not require any threat. Instead, courts look at:

• The relationship between the parties
• The tactics used to secure the agreement
• The vulnerability of the influenced party
• The fairness of the bargain (as evidence, not a separate requirement)

Typical Relationships

A presumption of undue influence may arise where there is a confidential or fiduciary relationship, such as:

• Parent–child
• Lawyer–client
• Trustee–beneficiary
• Doctor–patient
• Religious advisor–adherent
• Caregiver–elderly or dependent person

In these situations, once the weaker party shows a suspicious transaction (e.g., a grossly one‑sided gift or bargain), the burden may shift to the stronger party to prove that the transaction was fair and freely made, often requiring proof that the weaker party had independent advice.

Indicators of Undue Influence

Courts commonly consider whether there was:

• Discussion at an unusual or inappropriate time
• Insistence on completion at once or without delay
• Extreme emphasis on the negative consequences of delaying
• Use of multiple persuaders versus a single vulnerable person
• Absence of third‑party advisors or exclusion of trusted advisors
• Statements that there is “no time” to seek independent advice
• A result that is unusually favorable to the dominant party

No single factor is controlling. The question is whether the victim’s will was overborne by unfair persuasion arising from the relationship.

Effect on Contract

A contract formed under undue influence is voidable at the option of the influenced party. The usual remedy is rescission, with restitution as needed. As with duress, the right to avoid may be lost by ratification—for example, if the influenced party, after the relationship has ended and with full knowledge, confirms the transaction or continues to accept benefits.

Comparing Duress and Undue Influence

On the MBE, it is important to differentiate:

• Duress

  • Focus: Improper threat (crime, tort, bad‑faith breach, etc.)
  • Relationship: Any parties; no special relationship required
  • Includes economic duress and threats to third persons
  • Physical duress ⇒ void; other duress ⇒ voidable

• Undue Influence

  • Focus: Unfair persuasion exploiting a relationship of trust or domination
  • Relationship: Usually confidential or fiduciary
  • No explicit threat; instead, manipulation and over‑persuasion
  • Contract ⇒ voidable

If you see a threat of violence or crime, think duress. If you see a caretaker or advisor pushing a vulnerable person into an oddly favorable deal for themselves, think undue influence.

Remedies, Timing, and Ratification

For both duress and undue influence:

• The aggrieved party may seek rescission and restitution.
• They must act promptly after the improper pressure ends; undue delay may be treated as affirmation.
• Accepting benefits or performing with full knowledge and freedom typically amounts to ratification, barring the defense.

On an MBE question, if the fact pattern shows that a party waited a long time after the duress ceased, or continued accepting benefits while represented by counsel, the right to avoid may have been lost.

Worked Example 1.1

A supplier threatens to stop delivering essential goods to a retailer unless the retailer agrees to pay a higher price, knowing the retailer cannot obtain the goods elsewhere in time and will lose critical contracts. The supplier is already under a contract to deliver at the original price. The retailer agrees. Is the new agreement enforceable?

Answer:
Likely not. The supplier made a wrongful threat to breach an existing contract in bad faith, and the retailer had no reasonable alternative because it could not cover in time. This is economic duress. The modification is voidable at the retailer’s option; the retailer may rescind the price increase and insist on the original terms.

Worked Example 1.2

An elderly woman, dependent on her nephew for daily care, is persuaded by him to sell her house at a fraction of its value. He discourages her from seeing a lawyer and insists that she sign immediately, saying he will stop helping her otherwise. She later regrets the sale. Can she set aside the contract?

Answer:
Yes. The nephew occupies a position of trust and domination, and he used unfair persuasion (rushing her, discouraging independent advice, threatening to withdraw care) to obtain a grossly one‑sided deal. This is undue influence. The contract is voidable at the woman’s option, and she can seek rescission.

Worked Example 1.3

A small contractor is behind schedule on a project. The owner threatens: “If you do not agree to waive all delay claims and accept a reduced final payment, I will sue you for defective work.” The owner has a good‑faith basis to believe some work is defective. The contractor, fearing litigation costs, agrees and later sues to recover the full price, alleging duress. Is the defense likely to succeed?

Answer:
Probably not. A threat to bring a good‑faith civil suit to vindicate one’s perceived rights is generally not an improper threat. The owner may be bargaining hard, but is not threatening anything wrongful. This is not duress; the modification is likely enforceable.

Worked Example 1.4

A threatens B: “Sign this personal guarantee of my company’s debts or I will file a false police report claiming you embezzled from me.” B signs. A later assigns the guarantee for value to C, who knows exactly how A obtained it. C sues B on the guarantee. Can B assert duress?

Answer:
Yes. A’s threat to file baseless criminal charges is an improper threat creating duress, making the guarantee voidable by B. Because C took the assignment with notice of the duress, C is not a protected good‑faith party. B may assert the duress defense against C and avoid liability on the guarantee.

Exam Warning

Be careful: Not all pressure or persuasion amounts to duress or undue influence. Lawful threats (for example, to sue on a valid claim), hard bargaining, and the mere fact that one party has greater bargaining power do not make a contract voidable. Always ask:

• Is the threat wrongful?
• Did the victim truly have no reasonable alternative?
• Is there a relationship of trust or domination plus unfair persuasion?

On the MBE, incorrect choices often treat ordinary negotiations or economic pressure as “duress” without an improper threat.

Revision Tip

When a party claims duress or undue influence, systematically check:

• Source of pressure: threat vs. persuasion
• Nature of threat: criminal, tortious, bad‑faith breach, or lawful?
• Alternatives: Could the victim reasonably refuse or protect themselves?
• Relationship: Was there a fiduciary or confidential relationship?
• Timing and conduct: Did the victim promptly seek rescission, or did they ratify?

Practicing with short hypotheticals and classifying them as duress, undue influence, or neither is an efficient way to prepare for MBE questions in this area.

Key Point Checklist

This article has covered the following key knowledge points:

• Duress and undue influence attack the quality of assent, not the existence of consideration.
• Physical duress (e.g., gunpoint signing) renders a contract void; other forms of duress render it voidable at the victim’s option.
• Economic duress requires a wrongful economic threat plus lack of reasonable alternatives; mere financial pressure or hard bargaining is insufficient.
• A contract induced by duress by a third party is voidable if the other contracting party knew or should have known of the duress; otherwise it is enforceable against the victim.
• Undue influence arises from unfair persuasion in a relationship of trust or domination and results in a voidable contract.
• Confidential or fiduciary relationships (such as lawyer–client or caregiver–elderly person) may give rise to a presumption of undue influence in suspicious transactions.
• The primary remedy for duress and undue influence is rescission and restitution; the victim must act promptly and avoid conduct that would amount to ratification.
• On MBE questions, always distinguish between improper threats (duress) and unfair persuasion in a special relationship (undue influence), and separate both from mere hard bargaining.

Key Terms and Concepts

• Duress
• Physical Duress
• Economic Duress
• Improper Threat
• Void Contract
• Voidable Contract
• Undue Influence
• Confidential or Fiduciary Relationship
• Rescission
• Ratification