Genuine
Agreement
and Recission
Mollie DeJesus
Opening question
 Two
parties are making a contract. (Party
A and party B). If party B physically
threatens party A to sign the contract,
what can party A do in order to get out of
signing the contract?
Important terms




Recission- backing out of any transaction and
offering to give back what you received
Ratification- conduct suggesting you intend
to be bound by the contract
Duress- occurs when one party uses an
improper threat or act to obtain an expression
of agreement
Undue influence- occurs when one party to
the contract is in a position of trust and
wrongfully dominates the other party
What is genuine
agreement?
The act of two parties agreeing
on a contract without the
presence/ occurrence of
threats or foul play to obtain
the contract.
Things that might cause a lack
of genuine agreement
 Fraud
 Misrepresentation
 Undue
influence
 Duress
 Mistakes
 Physical
threats
What can happen if a
contract lacks genuine
agreement?
The contract will be voidable and the injured party
can back out of the contract legally. Recission will
occur. The injured party can request the return of
what they gave, and in turn give back what they
received.
Rules of Recission
 Must
occur shortly
after the discovery
of the fact that
there is no genuine
agreement
 Must
occur before
you ratify the
contract
Duress is a crime!
-Even if a party does not follow
through with their threat, it is still
a crime. If a threat is made, tort
is committed or crime is
committed in order to win an
agreement, it will always be
classified as duress.
-The crime/tort/threat may
involve, but is not limited to, the
physical life, liberty, or property
of the victim, the victim’s
immediate family or near
relatives.
Threat to Report Crimes
 Even
if one observes someone else
commit a crime, the threat to report it in
order to convince them to sign a contract
counts as duress.
Threats to Sue
-Threatening to sue a party is legal, but threatening
to sue a party in order to scare them into ratifying a
contract is yet another example of duress.
-In other words, if a threat is made for a purpose
unrelated to the suit, it is duress.
Economic Threats
 These
threats
involve money
usually… and are
also classified as
duress.
Elements of Undue Influence
 Relationship
 Wrongful
persuasion
 Unfair persuasion
Example of Duress (Threat of
Illegal Conduct)


Cameron owned a promising racehorse that
Link had offered to buy for undisclosed
parties. When Cameron refused to sell, Link
lowered his voice and slowly said, “Listen, the
people I represent don’t take ‘no’ for an
answer. If you don’t sell, they’ll hurt you.
They’ll hurt your family. Like a good friend, I’m
telling you to sell. You’re getting a fair price,
just sign the contract.” Cameron, who secretly
recorded the conversation, sold. Then he
called the police.
Can he now rescind and get his horse back?
Example of Duress
(Threats to Sue)
During divorce negotiations, a
husband threatens to sue for
custody of the children if the
wife doesn’t sign over valuable
shares of stock. Because he
doesn’t really want custody of
the children, this threat to sue,
makes the contract for the
stock voidable. If the
threatened suit is completely
groundless, a resulting contract
may be voidable for duress.
Duress example (Economic
threat)

If a manufacturer has a
contract to pay a supplier $15
for a special computer part
needed to maintain
production, the supplier might
threaten to withhold the parts
unless the manufacturer
agrees to a price of $20 each.
If a disruption in the flow of
parts would cause a
substantial injury to the
manufacturer, then the courts
would find the agreement on
the new price an economic
voidable for duress.
Duress example (Undue
influence; Unfair influence)
An elderly person, who is dependent on one child
for daycare, may sell her home to that child for half
its value.
Closing Question
 Why
does duress make a contract
become voidable? Is this fair?