First Principles of Business Law

2. Duress

2.1. Obtaining consent by means of compulsion

Legal transactions are legally binding if they are entered into freely and voluntarily by parties who wish and intend to be bound.  However, a person might consent to a transaction not freely but because they are forced (compelled) to do so. Obtaining consent by unlawful compulsion is known as 'duress'. 

The law says that a transaction entered into because of duress is not automatically void ab initio, but it is voidable. This means that it can be set aside (avoided, made void, rescinded) by a court order at the request of the person who was subjected to the duress. Following such an order, the parties can ask to be restored to the position they were in prior to the transaction (restitutio in integrum).

But it is important to realise that not every type of persuasion or pressure amounts to unlawful duress. Certain types of persuasive behaviour are legitimate in conducting legal transactions.  For example, offering inducements or pointing out adverse risks are usually tolerated.  It is important to know where to draw the line between legitimate pressure or persuasion and cases of duress.