Definition of Economic Duress: An illicit act that is adequately coercive to induce a “reasonably prudent person” to yield to the pressure applied by the perpetrator because they lack an acceptable alternative.
Illicit Acts: These acts may be any of the following, blackmail, knowingly making a false claim, or issuing a bad faith threat to begin civil legal proceedings along with many others.
What Are Acceptable Alternatives?
Determining whether or not there was an acceptable alternative in the context of the situation in which there was claimed to be economic duress is based upon an objective standard; the determination is based upon whether a reasonably prudent person would have followed an alternative course in the situation.
Where the term economic duress is applied?
Economic duress is a form of duress that is less known, but one that can be claimed and used in business litigation matters. An example in which economic duress could be claimed would be if, during a negotiation, one party would be forced to forfeit all of their assets if they did not acquiesce to the contract or agreement.
Currently, the doctrine of economic duress does not require the person to have committed a crime or a tort in order to be considered economic duress. The doctrine is used to rectify wrongs that are committed in the business world that are not caught and rectified through other regulatory avenues.
While the doctrine of economic duress bears some similarities to the general doctrine of duress, undue influence, and menace there are small, but important, differences that separate them from one another.
The General Doctrine of Duress:
- This doctrine refers to an illegal action taken by a party by which another's consent is forcibly obtained via threats or the instillation of fear through other means. While the doctrine of economic duress includes financial consequences, the general doctrine of duress often includes threats of confining the person, the illegal detention of the person or their property, or the legal detention of a person via fraudulent means.
- Undue influence is marked by using one's real or assumed authority over another to gain an unfair advantage, by taking unfair advantage of another's fragile mental state, or by being extremely oppressive in taking unfair advantage of another person's state of distress. Undue influence bears resemblance to the doctrine of economic duress, but the latter is more narrow in its use, because it only includes financial matters.
- In California menace refers to a threat of violence against the person or their property, or to defame the person's character. Cases of menace usually include physical threats.
This is a civil litigation law blog. It is not intended to be used as legal advice. For further information please contact the law offices of attorney Ramona Kennedy.
Ramona Kennedy (Attorney) received her Jurisprudence Doctorate and is a licensed attorney in California (USA).
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