Chapter 7- Section 1

1. Chapter 7- Section 1 Duress & Undue Influence By: Jess Barr, Christian Campbell, Zack Kasabo, & Trent Zook

2. Vocabulary • Genuine Assent- True and complete agreement • Voidable Contract- Contract in which the injured party can withdraw, thus canceling the contract • Rescission: Backing out of the transaction by asking for the return of what you gave and offering to give back what you received. • Ratification: Acting toward the contract as though one intends to be bound by it; principle’s assent to unauthorized acts of an agent • Duress: This occurs when one party uses an imporoper threat or act to obtain an expression of agreement • Undue Influence: This occurs when one party to a contract is in a position of trust and wrongfully dominates the other party.

3. Genuine Assent & Duress • Whether oral or written, an agreement will be treated as valid (legally binding and enforceable) • Genuine assent lacks in court due to causes such as duress,undue influence, mistake, misrepresentation, and fraud • Without genuine assent, a contract is typically voidable. • To be effective, a rescission must be prompt and must occur before you ratify the contract. • Most parties are subject to duress in the form of pressure and apprehension when negotiating a contract. • The law only allows a contract to be undone because of it in a few instances

4. Forms of legal duress • Threats of illegal conduct- Threatening someone to engage in illegal conduct, such as a crime or tort, to win agreement are always duress. • Committing an act of violence (Ex: stabbing) • Threatening a crime (Ex: threatening to stab) • Committing a tort (Ex: unlawful detention) • Threatening a tort to obtain a signature on a written contract • Threats to report crimes- When you observe a crime, you have the duty to report it to the proper authorities; if you were to use threat of reporting to force the criminal to contract with you, it is duress. (This may also be extortion)

5. Forms of legal duress continued... • Threats to sue- When the threat to sue is really made for a purpose unrelated to the suit, it may be duress • Economic Threats- In economic duress cases the courts look at the threat and the victim’s alternatives available to the threatened party. (If the threatened party had no choice but to enter into or modify a contract, then duress exists.

6. Undue Influence and Assent • The 2 key elements in undue influence are the relationship and the wrongful or unfair persuasion. • A contract is voidable by the victim when a contract arises because of undue influence The Relationship: • A relationship of trust, confidence, or authority must exist between the parties to the contract. • This relationship is presumed to exist between an attorney and client, wife and husband, parent and child, guardian and ward, physician and patient, or minister and congregation member • Informal relationships such as a housekeeper-elderly employer may be based on undue influence but require evidence of domination for proof.

7. Undue Influence and Assent Continued... Unfair Persuasion: • The best evidence of unfair persuasion is found in the terms of the contract • To prevent a claim of undue influence, the stronger party should act with total honest, fully disclose all important facts, and insist that the weaker party obtain independent counsel before contracting. (Persuasion or nagging do not necessarily mean undue influence exists.) • A difficult question or fact for a jury is whether actions rises to the level of undue influence.

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