## Facts

- A real estate developer and an investor formed a partnership to develop a large Manhattan residential project; the investor supplied most equity and collateral.
- After a major market decline, the developer alleged the investor repudiated partnership obligations at a critical stage, threatening project collapse and severe financial loss.
- In November 1987, the developer executed a promissory note in favor of the investor, and the developer’s spouse executed a personal guaranty; defendants claimed both were signed under economic duress.
- On July 1, 1988, the parties executed a modified note (face amount about $9.15 million) and a new written guaranty; the note was later assigned to the plaintiff.
- The plaintiff sued on the July 1988 note and guaranty for an unpaid principal amount (with interest and costs); defendants did not dispute default but asserted economic duress.
- The plaintiff argued defendants ratified the obligation by making substantial payments of principal and interest for nearly two years after the restructuring.
- The trial court denied the plaintiff’s motion for summary judgment, finding triable issues on duress and ratification.

## Issues

1. Whether defendants raised triable issues that the note and guaranty were voidable because they were executed under economic duress.
2. Whether defendants’ post-execution payments established ratification as a matter of law, barring the duress defense.

## Decision

- The Appellate Division affirmed the order denying summary judgment for the plaintiff.
- The court held material fact disputes existed as to whether the instruments were procured through economic duress.
- The court also held material fact disputes existed as to whether defendants’ payments constituted ratification or were made while duress continued.

## Legal Principles

- Economic duress may render an agreement voidable when wrongful or unlawful acts or threats deprive a party of free will and leave no immediate and adequate alternative but to agree.
- Alleged wrongful repudiation of a preexisting obligation can support an economic duress claim when used to coerce new terms during an acute financial crisis.
- Ratification can bar a duress defense when, after duress ends and with knowledge of the facts, the party accepts benefits or performs for an extended period without timely repudiation.
- Whether duress existed, whether it was “wrongful,” and whether later performance reflects ratification or continuing coercion are commonly fact questions not suitable for summary resolution.

## Conclusion

Because the record permitted competing inferences on both economic duress and ratification—particularly whether defendants had meaningful alternatives and whether coercive circumstances persisted—the plaintiff was not entitled to judgment on the note and guaranty as a matter of law, and the defenses required trial-level factfinding.


Sosnoff v. Carter, 165 A.D.2d 486, 568 N.Y.S.2d 43 (1st Dep’t 1991)