Breach of Contract – Affirmative Defense – Economic Duress
Affirmative Defense
An affirmative defense is a set of facts other than those alleged by the plaintiff, which, if proven by the defendant, defeats or mitigates the legal consequences of the defendant’s otherwise unlawful conduct. Duress serves as an affirmative defense when it is argued that the defendant was forced into the contract by the wrongful threat of the plaintiff, and thus their breach of contract should be excused.
Duress
Duress involves compelling a person to act against their will or to involuntarily enter into a contract by threatening harm. The harm threatened can be physical, economic, or emotional. For duress to serve as a valid defense, the defendant must demonstrate:
- Wrongful Act: The party claiming economic duress must demonstrate that the other party committed a wrongful act. This wrongful act must be sufficiently coercive to cause a reasonably prudent person to agree to an unfavorable contract. Examples of wrongful acts include the assertion of a claim known to be false, a bad faith threat to breach a contract, or a threat to withhold a payment.
- Lack of Reasonable Alternative: The party subjected to the wrongful act must have had no reasonable alternative but to agree to the contract. This means that a reasonably prudent person in the same situation would have felt compelled to submit to the coercive demands due to the lack of viable options. The determination of whether a reasonable alternative existed is a factual inquiry.
- Causation: There must be a direct causal link between the wrongful act and the party’s decision to enter into the contract (i.e., the wrongful act must be the cause of the decision to contract). The wrongful act must have left the party bereft of the quality of mind essential to the making of a contract, essentially depriving them of their free will.
If a defendant successfully proves economic duress, they may not be held liable for breach of contract, as the contract may be considered void or voidable due to the lack of free and voluntary consent.
Disclaimer
The content of this blog is intended solely for informational purposes and does not constitute legal advice. Legal issues are complex and individual; as such, if you seek guidance on a specific legal concern, please consult with a licensed attorney. Contact A.E.I. Law, P.C. at (888)-423-4529 for personalized legal counseling.
