Coercion in Contract Law: A Legal Perspective
Coercion in Contract Law: How it Affects the Enforceability of Agreements
Overview:
Since freedom of will is essential to a valid contract and one may not be considered to exercise freedom of will when under duress, it follows that duress vitiates all contracts induced thereby. However, a contract made under duress is ordinarily voidable and not void, for the consent is present, although not such a free consent as the law requires.
Thus, while the contract is subject to being avoided at the instance or election of the oppressed party until it is avoided there is a contract in existence.
Relevant Provisions:
Meaning of Coercion:
Definitions of Coercion:
To coerce means “to force or compel, as by threats, to do something.
(By coercion and duress are meant “the compulsion under which a person acts through fear of personal suffering, as from injury to the body or from confinement, actual or threatened.
Coercion is “compulsion; constraint; compelling by force or arms or threats. It may be actual, direct, or positive, as where physical force is used to compel an act against one’s will, or implied, legal, or constructive, as where one party is constrained by subjugation to another to do what his free will would refuse.
One can be said to be a victim of Coercion only when he is under direct positive or actual force i.e. under any arm or a threat.
Coercion is the committing or threatening to commit, any act, forbidden by the ‘Pakistan Penal Code, or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. The Explanation in the Section says that “It is immaterial whether Pakistan Penal Code is or is not in force in the place where the coercion is employed.”
Essential Elements of Coercion:
(1) Committing or threatening to commit:
Both the committing, or threatening to commit, any act forbidden by the Penal Code whether to the prejudice of the party consenting to the agreement, or to the prejudice of any other person whatever, can amount to coercion if done with the intention of causing him to enter into it. The expression shows that to constitute coercion, it is not essential that the act in question must have been committed. A mere threat to commit the same is sufficient if the threat:
- Is made with the intention of causing the contracting party to enter into the agreement to the prejudice of any person whatever, and
- In fact, coerces the will.
(a) In Ranyanayakamma vs Al Warseth: A gentleman died leaving a young widow, The relatives of the deceased threatened the widow to adopt a boy otherwise they would not allow her to remove the dead body of her husband for cremation. The widow adopted the boy and subsequently applied for cancellation of the adoption. It was held that her consent was not free but induced by coercion. The adoption was set aside. (1849 13 Mad. 214)
(b) A threatens to cause physical harm to B if he does not sign the Contract and B signs it. This contract is made under coercion and is void.
(2) Act must be forbidden:
An act, to constitute coercion within the first part of the section, must be one forbidden by the Penal Code, expressly or impliedly. And an act would be deemed to have been forbidden by the Penal Code if it is one. which is made punishable to abet or commit. So, although, there is no provision in the Penal Code that forbids, in terms the commission of suicide, the intention of the Legislature is to forbid such an act. The expression “any act forbidden by the Penal Code” is wider than the expression “punishable by the Penal Code”. Simply because a man escapes punishment, it does not follow that the act is not forbidden by the Penal Code. For example, a lunatic or an infant need not be punished. That does not mean that their criminal acts are not forbidden by the Penal Code.
(a) If a person holds out a threat of committing suicide to his wife and son if they refuse to execute a release in his favor and in consequence thereof they execute the release, the release would be deemed to have been obtained by coercion within the meaning of Sec. 15.
(3) Unlawfully detaining or threatening to detain:
Coercion by unlawfully detaining, or threatening to detain any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement, renders the consent not free, since it may and frequently does operate as a coercion of the will.
An agent refused to hand over the account books of the business to the new agent unless the Principal released him from all liabilities. The principal had to give a release deed as demanded. It was held that the release deed was given under coercion and voidable at the option of the Principal. [AIR 1927 Mad. 852]
The government gave a threat of attachment against the property of A, for the recovery of a fine due from B, the son of A. A paid the fine. It was held that the contract was induced by coercion. [(1939) A WR 247]
(4) Act must be to the prejudice of any person:
The word “prejudice” does not mean mere sentimental prejudice. It means some legal injury that results in some loss, detriment, or inconvenience to the person coerced, or any other person, or some unlawful gain to the person exercising coercion at the cost of the person coerced, or at the cost of any other person.
(5) Threat or prejudice may be caused to a third party:
The threats may be directed against third persons who are near relatives of the person making the contract. Thus, a threat to injure one’s parents, child, husband, wife, brother, friend, aunt, grandchild, or son-in-law may be coercion. It should be noted that coercion need not be exercised only by the contracting party. It can be exercised by any person.
- (a) A threatens to kidnap B’s son if he does not give Rs. 2000$ to him. B agrees. The agreement has been brought about by coercion.
- (b) A threatens to shoot B if he does not let out his house to C. B agrees to let out his house to C. B’s consent has been caused by coercion.
(6) Intention must be to cause any person to enter into an agreement:
Effect of Coercion:
A contract entered into under coercion is voidable at the option of the party whose consent was so caused. (Sec 19) It means that if the aggrieved party feels it profitable may, either compel the other party for specific performance of the contract or he may set aside the contract. According to Section 64, if the aggrieved party decides to set aside the contract, he must restore any benefit received by him under contract to the other party from whom the benefit was received.
Classification of Coercion:
- (1) Duress by imprisonment.
- (2) Duress per minas.
Coercion/Duress of Imprisonment:
Under the common-law doctrine, duress of imprisonment arises where a person is actually imprisoned for an improper purpose without just cause, for a just cause without lawful authority, or for a just cause and under proper authority but for an improper purpose, and it is only where the imprisonment is with lawful authority, for a just cause, and for a proper purpose, that it can not be called duress. So a person who 1s unlawfully imprisoned and who is induced by his prosecutor or his prosecutor’s agent to enter into an agreement in order to obtain his liberty may avoid the agreement on the ground of duress. Duress by imprisonment may arise where there is a restraint of one’s liberty, whether in prison or elsewhere.
Coercion/Duress per Minas:
Duress per minas, or by threats, Duress per minas arises when a person is threatened with loss of life, with loss of life; with mayhem, imprisonment, and only in these cases at common law. It may be practiced in the following ways:
(a) Threats of Imprisonment:
Fear of imprisonment may be sufficient to constitute duress. To constitute duress by a threat of imprisonment for a supposed crime there must be a threat importing an illegal or wrongful imprisonment, or a resort to criminal prosecution for an improper purpose or from a wrongful motive, accompanied by such circumstances as would indicate a prompt or immediate execution of the threat. Mere threats of criminal prosecution are not enough; there must be a reasonable ground for apprehension that the threats will be carried into execution, and it must also appear that the threats operated on the mind of the party so as to overcome his will. A threat of imprisonment does not amount to duress unless it is made under such circumstances as to excite the fear of imminent and immediate imprisonment.
(b) Threats of Injury to Property:
According to a number of cases, a threat to destroy, injure, or detain goods or chattels, or to trespass on lands, is not such legal duress as will constitute a ground for Setting aside a contract made under its influence, the reason given for this being that the constraint which takes away free agency and destroys the power of withholding assent, a contract must be one which is imminent and without immediate means of prevention, and such as would operate on a person of a reasonable firmness of purpose to avoid a contract on the ground of duress, the threats according to the common-law doctrine, must be such as to strike with fear a person of common firmness good constancy of mind, and a person threatened with loss of property ought to have sufficient resolution to resist such a threat and to rely on the buy for his remedy.
A contract may be invalid or unenforceable by reason of economic duress or business compulsion where undue or unjust advantage has been taken of a person's economic necessity or distress to coerce him into making the agreement. So, where a person is called on either to comply with demands or suffer a serious business loss, some courts have regarded this as a species of duress in validating contracts induced thereby.
(c) Threats of Bodily Harm:
The early common-law rule, as we have seen, was that, while a threat against one’s life or to do bodily injury was of such a nature as to render the act done under its influence an act done under duress, yet the threat of bodily injury must be of great bodily harm, the loss of a limb, or mayhem, and a threat of a mere battery was not legal duress for the reason that it was not sufficient to overcome the mind and will of an ordinary firm and courageous man.
(d) Threats to Withhold Legal Rights:
A threat to withhold from a party a legal right which he has an adequate remedy to enforce will not constitute duress, such as to withhold payment of, or to repudiate, a debt or to refuse the performance of a contract.
(e) Threats of Civil Litigation:
The threat of civil litigation does not constitute duress, even under the modern doctrine, unless there is involved some actual or threatened abuse of process. So threats of, or the bringing of, a civil action does not constitute duress where the threat is made or the action is brought in good faith, that is, in the honest belief that a good cause of action exists, even though there is no legal right to enforce the claim on which the suit is threatened.
(f) Threats to Breach Contract:
A threat to breach a contract does not amount to duress where no irreparable injury would result if the threat were carried out, but under the modern doctrine, such a threat may constitute duress where the threatened breach would result in an irreparable injury.
(g) Threats to Perform Lawful Acts:
An act must be wrongful to constitute duress, likewise, a threat must also be wrongful to amount to duress, and a threat to do what one has a legal right to do ordinarily cannot constitute duress.