University of Arkansas at Little Rock Law Review

Volume 5 Issue 3 Article 1

1982

Coercion in Contract Law

E. Allan Farnsworth

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Recommended Citation
E. Allan Farnsworth, Coercion in Contract Law, 5 U. ARK. LITTLE ROCK L. REV. 329 (1982).
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 UNIVERSITY OF ARKANSAS AT LITTLE ROCK
LAW JOURNAL

VOLUME 5 1982 NUMBER 3

COERCION IN CONTRACT LAW*

E. Allan Farnsworth**

It was suggested that I might discuss the Restatement (Second)

of Contracts, which was published less than a year ago.' Rather
than deal with the Restatement Second as a whole, however, I
thought it wiser to confine these remarks to some aspect of contract
law and to deal with the impact of the Restatement Second on that
aspect. I have chosen as a subject coercion, an aspect of contract law
that is of central importance in a society that depends as heavily as
does ours on individual choice. For the larger the role accorded to
individual choice, the greater the significance of coercion in
contracting.
The common law treats claims of coercion in contracting under
the heading of duress. Over centuries, the law of duress has gradu-
ally been liberalized so that it is more broadly applicable. As the
Supreme Court of Arkansas expressed it in 1938, there is "a progres-
sive tendency toward a more liberal consideration of causes that
would tend to avoid a contract" for duress. 2 I plan, first, to trace
that "progressive tendency" as it is reflected in the Restatement Sec-
* This article is based on a Ben J. Altheimer Lecture, delivered on January 29, 1982.
Parts of it are adapted from Farnsworth on Contracts (Little, Brown & Co. 1982) and are
reproduced with permission of the holder of the copyright, E. Allan Farnsworth.
** Alfred McCormack Professor of Law, Columbia University.
1. Justice Robert Braucher was Reporter for roughly the first half of the project and
the author was Reporter for the remainder.
2. Perkins Oil Co. v. Fitzgerald, 197 Ark. 14, 26-27, 121 S.W.2d 877, 883 (1938). The
Arkansas Supreme Court recently has been critical of Perkins, saying that "it must be shown
that there was a threat of some grievous wrong to establish duress." Sims v. First Nat'l
330 UALR LAW JOURNAL [Vol. 5:329

ond, and, second, to say a few things about the impact of these
changes on allied areas of the law. Let us begin with an examina-
tion of the requirements for a claim of duress. Duress may take
either of two forms: physical compulsion or threat.
Suppose that I put a pen in your hand and by sheer physical
force move your hand so that it produces your signature on a con-
tract with me. You are, in the picturesque phrase sometimes used, a
"mere mechanical instrument" and your act (if we can call it "your
act") does not result in a contract.3 But such cases of duress by
physical compulsion are rare, and I shall not discuss them further.
Let us turn our attention to duress by threat.
Suppose that, instead of holding your hand and moving it by
force, I tell you that if you do not sign a contract with me I will
break your arm. You believe, with good reason, that I mean what I
say and that I can do it. Seeing no other way out, you sign the
contract. This is duress by threat. In contrast to the case where I
moved your hand by physical force, your assent is effective to give
rise to a contract. But it is a voidable contract--one that you can
avoid ("rescind") if you reasonably promptly indicate your inten-
tion to do so and offer to make restitution of anything that you have
already received from me under the contract. On avoidance, you
are no longer bound by the contract and you are entitled to restitu-
tion of anything that I have already received from you under the
contract. Needless to say, such cases of duress by threat ofphysical
harm are almost as rare as cases of duress by physical compulsion.
Of more practical interest are cases of duress by threat of economic
harm.
For example, consider the following facts, taken from Austin
Instrument v. Loral Corporation,' decided by the Court of Appeals
of New York in 1971. A general contractor was awarded a six mil-
lion dollar contract by the Navy for the production of radar sets. It
then made a contract with a subcontractor to supply components.

Bank, 267 Ark. 253, 260, 590 S.W.2d 270, 275 (1979). But this was said in a case of a threat
by a third person.
3. See RESTATEMENT (SECOND) OF CONTRACTS § 174 (1981) ("conduct . . . physi-
cally compelled by duress . . . is not effective as a manifestation of assent").
4. 29 N.Y.2d 124, 272 N.E.2d 533 (1971). The facts of the case have been simplified
here. Austin's threat came when Loral, having been awarded a second contract by the
Navy, told Austin that it would be awarded subcontracts only for those components for
which it was the low bidder. Austin's threat was to stop delivery on the first subcontract
unless it was given price increases under that subcontract and also awarded a subcontract for
all the components required by Loral's second Navy contract. Loral made no claim on the
second subcontract.
 1982] COERCION IN CONTRACT LAW

Soon after the subcontractor began delivery, however, it threatened

to stop delivery unless the general contractor agreed to substantial
price increases on the subcontract. The subcontractor did stop de-
livery, the general contractor was unable to find a substitute source,
and it finally acceded to the subcontractor's demand. After the sub-
contractor had performed, the general contractor sued the subcon-
tractor to recover $22,250-the total of the price increases that the
general contractor had paid under the subcontract. The Court of
Appeals held that these facts made out a claim based on duress by
threat.
What does a claimant need to show in order to succeed on a
theory of duress by threat? The Restatement Second suggests four
requirements.' First, there must be a threat. Second, the threat
must be of a kind that the law condemns. Third, the threat must
induce the victim's manifestation of assent. Fourth, the threat must
be sufficiently grave to justify the victim's assent.
First, what is a threat? Though the Restatement Second at-
tempts no definition, it may be of interest to consider that question
in passing here. To begin with, a threat is a manifestation of an
intent to do or not to do something in the future ("I'll break your
arm" or "I'll break our contract"). But apromise is also a manifes-
tation to do something in the future. Suppose a contractor says to a
landowner, "I'll build the house." That is a promise. How does a
threat differ from such a promise? Ordinarily, at least, a significant
difference between a threat and any other statement of intention is
that a threat manifests an intention to do or not to do something that
is less desirable from the promisee's point of view than if the alter-
native were the case. Suppose that after the landowner has gotten
the contractor to agree to build the house, the contractor says, "I will
not build the house." You would call that a threat because his not
building the house is less desirable from the landowner's point of
view than his building it. Or suppose I say, "I'll give you a kiss."
You might well ask, "Is that a threat or a promise?" And I would
say that the answer depends on you: I have made a statement of
intention, and whether it is the kind of a statement that is described
here as a threat depends on whether my kissing you is less desirable
6
from your point of view than my not kissing you.
5. See RESTATEMENT (SECOND) OF CONTRACTS § 175 (1981) ("If a party's manifesta-
tion of assent is induced by an improper threat by the other party that leaves the victim no
reasonable alternative, the contract is voidable.").
6. For a discussion of the view that a promise to do something involves not only a
statement of intention to do it, but also of an intention to undertake to do it, see Raz,
 UALR LAW JOURNAL [Vol. 5:329

We are not interested in threats in the abstract, however, but

only in threats used to coerce someone else to make a contract. This
kind of threat is conditional on the recipient's not giving his assent
to a contract. For example, suppose that, after the contractor has
agreed to build a house for the landowner for $100,000, the contrac-
tor says, "I won't build the house if you don't promise to pay me
$150,000" ("I'll break the contract if you don't promise to pay me an
extra $50,000"). The contractor has made a conditional threat-a
kind of conditional promise. But an offer is also a kind of condi-
tional promise. How does the contractor's conditional threat differ
from an offer?
The answer seems simple. When, at first, the contractor said,
"I'll build the house if you promise to pay $100,000," that was an
offer because it was a promise, conditional on the landowner's con-
senting, to take a course of action (build the house) more desirable
from the landowner's point of view. But when, later on, the contrac-
tor said, "I'll not build the house if you don't promise to pay
$150,000," that was a threat, conditional on the landowner's not
consenting, to take a course of action (not build the house) less de-
sirable from the landowner's point of view.
But is there really a difference? Does not every offer involve a
more desirable and a less desirable alternative? When, at first, the
contractor said, "I'll build the house if you promise to pay
$100,000," he also said by implication, "but I will not build the
house if you do not promise to pay $100,000." (If he was not saying
this by implication, he would not be bargaining, would he?) And
when, later on, the contractor said, "I'll not build the house if you
don't promise to pay $150,000," he also said by implication, "but I
will build the house if you promise to pay $150,000." (If he was not
saying this by implication, he would not be coercing, would he?) So,
is not the contractor making essentially the same kind of proposal in
both situations?
Surely the form of the statement cannot make a difference. Of
course it is usual for what we call an "offer" to emphasize entice-
ment and for what we call a "threat" to emphasize intimidation.
But the contractor's offer would be no less an offer if he said, turning

Promises and Obligations, LAW, MORALITY AND SOCIETY (P. Hacker & J. Raz ed. 1977).
For a discussior of threats and promises, see P. ATIYAH, PROMISES, MORALS, AND LAW 157-
60 (1981). The Jiscussion there, however, is mainly concerned with whether it is possible to
conceive of circumstances in which a threat that would not commonly be regarded as an
offer can nevertheless create an obligation with regard to the action threatened-a question
with which I am not here concerned.
19821 COERCION IN CONTRACT LAW 333

it around: "I will not build the house if you do not promise to pay
me $100,000, but I will build the house if you do promise to pay me
$100,000"-and added-"You will never get another chance at a
price as low as this." Every offer involves a threat of this kind. Nor
would the contractor's threat be any less a threat if he said, turning
it around: "I will build the house if you promise to pay me
$150,000, but I will not build the house if you do not promise to pay
me $150,000"-and added-"I hope that you will take advantage of
this good opportunity for you." Every threat involves an offer of
this kind. Nothing is gained by attempting to distinguish offers
from threats for the purposes of the law of duress.' Since a claim of
duress can only succeed if the threat was one that the law condemns,
the significant task is not to distinguish offers from threats but to
distinguish those threats that the law condemns from those that it
does not condemn.
What kinds of threats does the law condemn?' The first cases
to recognize claims of duress involved threats of physical harm ("I
will break your arm"). Later cases included wrongful detention of
goods ("I will retain your Rembrandt").9 In these early cases the
action threatened was ordinarily a crime or at least a tort, and it was
natural to characterize the threat itself as "unlawful," or at least as
"wrongful." But now that the doctrine of duress has been liberal-
ized to include cases of economic duress, where the threatened act is
neither a crime nor a tort, it seems preferable to ask not whether the

7. Since the law of duress gives legal consequences to a threat only if it is improper, the
characterization of a proposal as a threat has no legal significance unless the threat is charac-
terized as improper. In other words, the law does not distinguish an offer that is not a threat
from a threat that is not improper. On the distinction sometimes drawn in philosophy be-
tween an offer and a threat, see infra note 21.
8. At this point a digression concerning "warnings" is in order. Consider these facts
based on a recent Florida case. An employer said to an employee, "I am going to fire you."
The employee, who was seeking another job, asked, "May I quit first," the employer said,
"Yes," and the employee resigned. The employee later claimed that her resignation had
been obtained by druess-a threat to fire her. The court held, however, that there was no
duress, noting that the employer had not said "Quit or be fired," but that the employee had
raised the possiblity of resignation. City of Miami v. Kory, 394 So. 2d 494 (Fla. Dist. Ct.
App. 1981).
The decision seems right because the concern of the law of duress is with threats used to
induce someone into making a contract and here the employer did not say "I am going to
fire you" in order to induce the employee to resign. Philosophical discussions of coercion
support this by distinguishing warnings from threats. See, e.g., Nozick, Coercion, in PrnLOS-
OPHY, POLITICS & SOCIETY 101, 120-27 (1972). RESTATEMENT (SECOND) OF CONTRACTS
§ 176 comment c (1981) concurs.
9. The seminal case on duress of goods was Astley v. Reynolds, 2 Strange 915, 93 Eng.
Rep. 939 (K.B. 1732) (detention of pawned plate until excess interest was paid).
 UALR LAW JOURNAL [Vol. 5:329

threat was "illegal" or "wrongful" but whether it was "improper,"

the term adopted by the Restatement Second.10 Yet the line that
separates improper threats from legitimate bargaining is not always
easy to draw. The difficulty is hinted at in what may be the most
notorious threat in contemporary prose. When Johnny Fontane
protested, "This guy is a personal friend of J. Edgar Hoover . . .
You can't even raise your voice to him."-"He's a businessman,"
the Don said blandly, "I'll make him an offer he can't refuse.""
Some kinds of threats are plainly improper. A threat to do
something that is a crime or a tort is an obvious example. Some less
obvious examples are listed in the Restatement Second.1 2 One of
these, mentioned earlier, is a threat to break a contract. Such a
threat is improper, but only if it "is a breach of the duty of good
faith and fair dealing" under the contract with the victim. 13 In ex-
plaining this category, the commentary to the Restatement Second
falls back on the commentary to the Uniform Commercial Code,
which says that "extortion of a 'modification' without legitimate
commercial reason is ineffective as a violation of the duty of good
faith."' 4 The Reporter's Notes to the Restatement Second cite Aus-
tin v. Loral in support.' 5 In the case of the contractor who now
wants $150,000 to build the $100,000 house, the propriety of his
threat would depend on his reason-his threat might be improper if
his desire for the extra $50,000 resulted from a suddenly acquired
taste for expensive sports cars but not improper if it resulted from
his having unexpectedly struck rock during excavation. The Re-
statement Second, like the Code, would have courts distinguish
among such threats according to the reasons for making them.
Note that each of the improper threats just mentioned is a
threat to do something one has no legal right to do-to commit a
crime or a tort, or to break a contract. Can there be duress if the
person making the threat has a right to do the thing that he threat-
ens to do? Courts have often said that such a threat cannot be du-
ress. Thus the Supreme Court of Arkansas said in 1924 that "[I1t is
not duress to threaten to do that which a party has a legal right to
do.", 6

10. See supra note 5.

11. M. Puzo, THE GODFATHER 39 (1969). See also id. at 384, 400.
12. See RESTATEMENT (SECOND) OF CONTRACTS § 176 (1981).
13. Id. § 176(1)(d).
14. Id. § 176 comment e, quoting UCC § 2-209 comment 2.
15. Id., Reporter's Note to comment e.
16. Ellis v. First Nat'l Bank, 163 Ark. 471, 474, 260 S.W. 714, 715 (1924).
1982] COERCION IN CONTRACT LAW

And yet this is clearly incorrect, as the Supreme Court of Ar-

kansas itself recognized in 1938, when it decided Perkins Oil Co. v.
Fitzgerald.7 Fitzgerald, a young man in his early twenties got a job
oiling machines in an oil seed mill where his stepfather had worked
for some time. One day in August he caught his hand in a machine
and, in attempting to extricate himself, caught his other hand. Fitz-
gerald lost both arms at about the elbow. The following January,
five months later, the mill asked Fitgerald to execute a release relin-
quishing his claims against the mill for $5,000 (the limit of the re-
sponsibility of the mill's insurer). Jasspon, one of the owners of the
mill, told him that if Fitzerald sued, counsel for the oil mill would
be able to delay any recovery for perhaps ten years; that if Fitzger-
ald did not accept the $5,000 in settlement the oil company would
fire Fitzgerald's stepfather and Jasspon would exert his influence to
see that the stepfather was not hired by any similar business; and
that Jasspon knew that Fitzgerald, his mother, and his brother (who
had an invalid wife) were all wholly dependent on Fitzgerald's step-
father. This was an offer that Fitzgerald could not refuse, and he
executed the release. Later, however, he sought to avoid it.
I assume that Jasspon had a right to do what he threatened to
do. The stepfather's employment was surely terminable at will
without cause, so his firing would not have been a breach of con-
tract. And as long as Jasspon did not defame the stepfather, his
exercise of his influence to prevent his employment elsewhere was
probably not tortious. Certainly the Arkansas Supreme Court did
not suggest that what Jasspon threatened would have of itself been
wrongful. Nevertheless, it allowed Fitzgerald to avoid the release.
When can one's threat be said to be improper if one only threatens
what one has a right to do? According to the Restatement Second,
A threat is improper if the resulting exchange is not on fair terms,
and ... the threatened act would harm the recipient and would
not significantly benefit the party making the threat .... 18
Jasspon's threat was improper in this sense. Firing Fitzgerald's step-
father would have harmed Fitzgerald without significantly benefit-
ing Jasspon. The philosopher Robert Nozick has termed exchanges
such as that proposed by Jasspon "unproductive."
If I buy a good or service from you, I benefit from your activity; I
am better off due to it, better off than if your activity wasn't done
or you didn't exist at all .... Whereas if I pay you for not
17. See supra note 2.
18. RESTATEMENT (SECOND) OF CONTRACTS § 176(2)(a) (1981).
336 UALR LAW JOURNAL [Vol. 5:329
harming me, I gain nothing from you that I wouldn't possess if
either you didn't exist at all or existed without having anything to
do with me.' 9
Under the Restatement Second a threat that proposes such an un-
productive exchange may be the basis for a claim of duress even
though the person making the threat has a right to do what he
threatens.
The Restatement Second describes another situation in which a
threat is improper even though the person making the threat has a
right to do what he threatens:
A threat is improper if the resulting exchange is not on fair terms,
and. . . the effectiveness of the threat in inducing the manifesta-
tion of assent is significantly increased by prior unfair dealing by
the party making the threat ....
Suppose a situation in which the contractor has not yet made a con-
tract with the landowner but has intentionally led him "down the
garden path" so far that the landowner had no practical alternative
but to rely on this contractor to build the house even if his bid is
$100,000. At that point, the Restatement Second says, it is improper
for the contractor to exact an exchange that is not on fair terms.
This finds some support in another of Nozick's distinctions,
under which a proposal is coercive if what is proposed is from the
victim's point of view worse than "the normal or expected" course
of events ("You won't get your daily dose of drugs if you don't sign
the contract") or worse than the "morally expected" course of events
("I will inflict my daily beating on you if you don't sign the con-
tract"). 2 ' Nozick would reach the same result as the Restatement
Second in the example given since not building the house would, in

19. R. NozIcK, ANARCHY, STATE AND UTOPIA 84 (1974).

20. RESTATEMENT (SECOND) OF CONTRACTS § 176(2)(b). See also id. § 176 comment f
(giving the example of "manipulative conduct during the bargaining stage that leaves one
person at the mercy of the other").
Subparagraph (2)(c) states a third situation, one that will not be discussed here:
A threat is improper if the resulting exchange is not on fair terms, and ... what is
threatened is otherwise a use of power for illegitimate ends.
21. See Nozick, supra note 8, at 112-13. Nozick would say that such a proposal is an
offer and not a threat at all. A substantial body of literature has developed over the philo-
sophical question: Is an offer a threat? For the views of others, compare Bayles, A Concept
of Coercion, in NoMos XIV, COERCION 17 (1972) ("coercion... never involves a promise
of benefit"), with Held, Coercion and Coercive Offers, id. at 49 ("A person unable to spurn an
offer may act as unwillingly as a person unable to resist a threat."). On the relevance of this
question to the law of duress, see supra note 7.
 1982] COERCION IN CONTRACT LAW

the circumstances, be worse than the "morally expected" course of

events from the landowner's point of view.
But Nozick's test would include situations not included in the
Restatement Second's. Suppose, for example, that the contractor
has built many identical houses for the owner, each for $50,000, and
now (with no inflation) insists on $100,000. Is it likely that a court
would hold that a proposal to build a house for $100,000 was an
improper threat because "the normal or expected" or the "morally
expected" course of events was to build houses for $50,000? It does
not seem so. As the commentary to the Restatement Second puts it:
Hard bargaining between experienced adversaries of relatively
equal power ought not to be discouraged. Parties are generally
held to the resulting agreement, even though one has taken ad-
vantage of the other's adversity, as long as the contract has been
dictated by general economic forces.22
Thus, though the Restatement Second may find support in Nozick's
formulation, it does not cast as wide a net.
In passing judgment on these more marginal cases of improper
threats, keep in mind that duress-unlike misrepresentation-gives
no claim to damages. The only consequence of concluding that a
threat is improper and therefore the basis for a claim of duress is to
allow restitution upon avoidance of the contract or, as John Dawson
summarized it, "to cancel out advantages secured by superior bar-
gaining power."23 Furthermore, note that in these marginal cases
(as opposed to threats to commit crimes or torts or to break con-
tracts) the Restatement Second imposes an additional requirement
for an improper threat that the resulting exchange be one that is not
on fair terms. 24 To a limited extent this counterbalances the Re-
statement Second's general expansion of the concept of an "im-
proper threat."
Third, when does a threat induce the manifestation of assent?
What is required here is simply causation. Did my threat to twist
your arm actually induce you to sign the contract or would you have
signed it anyway? Did the subcontractor's threat to break the sub-
contract actually induce the general contractor to agree to the modi-
fication or would it have agreed anyway?
Fourth, when is a threat sufficiently grave to justify the victim

22. RESTATEMENT (SEcoND) OF CONTRACTS § 176 comment f (1981).

23. Dawson, Economic Duress-An Essay in Perspective, 45 MICH. L. REv. 253, 287
(1947).
24. RESTATEMENT (SECOND) OF CONTRACTS § 176(2) (1981).
 UALR LAW JOURNAL [Vol. 5:329

in succumbing to it? The early common law imposed a very strict

test. According to Lord Coke, in the early part of the seventeenth
century, the victim might avoid a contract only
for fear of losse of life .... of losse of member, . .. of mayhem,
and . . . of imprisonment; otherwise it is for fear of battery,
which might be very light, or for burning of his houses, or taking
away, or destroying of his goods or the like, for there he may
have satisfaction in damages.25
(Note that it is not entirely clear that Coke would have considered
my threat to break your arm-as opposed to my threat to break it
off-sufficient.) This strict view was echoed as late as 1856 in Burr v.
Burton, the earliest Arkansas duress case that I have been able to
find, in which it was said that there must be a threat that "excites a
fear of some grievous wrong, 26
as of death, or great bodily injury, or
unlawful imprisonment.
But the notion that the victim of a threat to property might al-
ways be expected to refuse assent and resort to an action for dam-
ages began to give way in the eighteenth century with the
recognition of "duress of goods," the wrongful detention of the vic-
tim's property. This presaged a major change in the doctrine of du-
ress and paved the way for the more liberal doctrine of economic
duress in cases like Austin v. Loral and Perkins Oil Co. v. Fitzgerald
in which the threat goes to the victim's economic interests rather
than to his person or his property. In the course of this expansion of
duress, courts have had great difficulty in formulating the standard
to be applied. The early common law imposed a stubbornly objec-
tive requirement that the threat be sufficient to overcome the will of
"a person or ordinary firmness"27 or-as an Arkansas judge ex-
pressed it just over a century ago-"A man or person of ordinary
courage. '28 The pendulum then swung to a more subjective stan-
dard under which the threat need only have deprived the particular

25. E. COKE, SECOND INSTITUTE 482-83 (1642).

26. 18 Ark. 214, 233 (1856).
27. 1 W. BLACKSTONE, COMMENTARIES* 131 (1765), relying on 2 H. BRACTON, ON THE
LAW AND CUSTOMS OF ENGLAND 65 (Thorne tr. 1968) ("nor is it the fear of the weak and
timid, but such as may occur in a resolute man"). For an application of the test, see King v.
Lewis, 188 Ga. 594, 4 S.E.2d 464 (1939) ("overcome the mind and will of a person of ordi-
nary firmness").
28. Bosley v. Shanner, 26 Ark. 280, 281 (1870) (approving jury instruction that threat
must suffice to "excite the reasonable apprehensions of a man or person of ordinary cour-
age"), quoted with approval in Fonville v. Wichita State Bank & Trust Co., 161 Ark. 93, 96,
255 S.W. 561, 562 (1923).
 19821 COERCION IN CONTRACT LAW 339

victim of his "free will." 29 Difficulties in giving meaning to the term

"free will" have now caused the pendulum to swing back to another
more objective standard under which the threat must have left the
particular victim-as 30
the Restatement Second puts it-"no reason-
able alternative."
From what I have said so far, you can see that the expansion of
the doctrine of duress is due primarily to the liberalization of two of
the four requirements: the second (that the threat be one that the
law condemns) and the fourth (that the threat be sufficiently grave
to justify the victim's assent). Now I turn to the effect of this expan-
sion on two doctrines that are allied to duress: undue influence and
the pre-existing duty rule. I call these doctrines "allied" rather than
"related" to duress because though, like duress, they may be used to
give relief against coercive practices, they have very different ances-
tries. Let us look at the first of these three allied doctrines, undue
influence.
Whereas the concept of duress grew up in courts of law, that of
undue influence developed in courts of equity, a distinction that
may be of special interest in Arkansas, since it still has courts of
equity. The purpose of the concept of undue influence was to give
relief to victims of unfair transactions that were induced by im-
proper persuasion. In contrast to duress, the essence of which was
simple fear induced by threat, the equitable concept of undue influ-
ence was aimed at the protection of those afflicted with a weakness
that fell short of incapacity against improper persuasion that fell
short of misrepresentation or duress by those in a special position to
exercise such persuasion. Two elements are commonly required:
first, a special relation between the parties; second, improper persua-
sion of the weaker by the stronger.3 1
Traditionally, the special relation is one of trust or confidence
that justifies the weaker party in assuming that the stronger will not
act in a manner inconsistent with his welfare. Examples include the
relations between parent and child, husband and wife, clergyman
29. Winget v. Rockwood, 69 F.2d 326, 330 (8th Cir. 1934) ("the ultimate fact in issue is
whether such person was bereft of the free exercise of his will power"); Austin Instrument
Co. v. Loral Corp., 29 N.Y.2d 124, 272 N.E.2d 533 (1971) (threat deprived victim of "its free
will"); see RESTATEMENT (FIRST) OF CONTRACTS (1932) § 492(b) ("precludes him from ex-
ercising free will and judgment").
30. See supra note 5.
31. See RESTATEMENT (SECOND) OF CONTRACTS § 177(1) (1981) ("Undue influence is
unfair persuasion of a party who is under the domination of the person exercising the per-
suasion or who by virtue of the relation between them is justified in assuming that that
person will not act in a manner inconsistent with his welfare.")
340 UALR LAW JOURNAL [Vol. 5:329

and parishioner, and physician and patient. But some courts have
extended the protection afforded by the doctrine beyond relations of
trust and confidence to those in which the weaker party is for some
reason under the domination of the stronger.
Once the requisite relation is shown, it must then be shown that
the assent of the weaker party was induced by unfair persuasion on
the part of the stronger. What will be characterized as "unfair" de-
pends on a variety of circumstances, but the ultimate question is
whether the result was produced by means that seriously impaired
the free and competent exercise of judgment, and a particularly im-
portant factor in showing unfairness in persuasion is imbalance in
the resulting bargain.
The use of the doctrine of undue influence to give relief from
coercion can be seen from the Odorizzi case.32 Odorizzi was a
school teacher who alleged that after he had been arrested on crimi-
nal charges of homosexual activity, questioned by the police,
booked, released on bail, and gone for forty hours without sleep, the
superintendent of the school district came to his apartment to ask
for his resignation. The California District Court of Appeal noted
the possibility "that exhaustion and emotional turmoil may wholly
incapacitate a person from exercising his judgment" and held that
the pleadings sufficed to show the required relation of "a dominant
subject to a servient object. '3 3 It concluded that
the representatives of the school board undertook to achieve their
objective by overpersuasion and imposition to secure plaintiff's
signature but not his consent through a high-pressure carrot-and-
stick technique-under which they assured plaintiff they were
trying to assist him, he should rely on their advice, there wasn't
time to consult an attorney, if he didn't resign at once the school
district would suspend and dismiss him from his position and
publicize the proceedings, but if he did resign the incident
wouldn't jeopardize his chances of securing a teaching post
elsewhere. 34
The court held the resignation voidable on the ground of undue
influence.
A court could equally well reach the same result, however,
under the Restatement Second's expanded doctrine of duress. The
liberalization of the requirement that the threat be one that the law

32. Odorizzi v. Bloomfield School Dist., 246 Cal. App. 2d 123, 54 Cal. Rptr. 533 (1966).
33. Id. at 131, 54 Cal. Rptr. at 540.
34. Id. at 135, 54 Cal. Rptr. at 543.
1982] COERCION IN CONTRACT LAW

condemns would permit the court to find that the school board's
threat to publicize any proceedings against Odorizzi and hurt his
chances of obtaining another job was an improper one on the
ground that doing so would harm Odorizzi and would not signifi-
cantly benefit the school board. And the liberalization of the re-
quirement that the threat be sufficiently grave to justify the victim's
assent would permit the court to conclude that Odorizzi had no rea-
sonable alternative but to resign in the face of the improper threat.
It is therefore a likely consequence of the liberalization of the
requirements of duress that courts and litigants will place more em-
phasis on the coercive nature of transactions that were previously
subject to attack only on the grounds of undue influence. The doc-
trine of duress may, in the long run, swallow up much of what has
previously been considered to be undue influence.35
A second doctrine allied with duress is the pre-existing duty
rule, an aspect of consideration. Under the rule, a party's perform-
ance of a duty that he already owes under a contract cannot be con-
sideration for a promise by his cocontractant 6 Nor can a party's
promise to perform such a duty be consideration for a promise by
his cocontractant. In practice, the rule has often played an impor-
tant role in connection with contract modifications obtained by
coercion.
For a simple example, recall the case of the contractor who
agreed to build a house for $100,000. Suppose that, after work has
begun, he threatens to walk off the job unless the landowner
promises to pay an extra $50,000. The landowner, in urgent need of
the house and dispairing of finding another contractor quickly,
promises to pay the extra $50,000 in return for the contractor's
finishing the work. But on completion of the house, the landowner
refuses to pay more than the original $100,000. Is the modification
enforceable so that the contractor can recover the additional sum
from the owner?

35. For a suggestion that the doctrine of undue influence is also in danger of being
swallowed up by that of unconscionability, see Eisenberg, The BargainPrincileand its Lim-
its, 95 HARV. L. REV. 741, 775-76 (1982) (discussing the Odorizzi case as one under the
"doctrine of unfair persuasion," an aspect of "the principle of unconscionability"). Eisen-
berg also suggests that the doctrine of duress may be in similar danger. Id. at 799 ("duress
may now be seen as simply a special case of the exploitation of distress," also an aspect of
"the principle of unconscionability"). It seems unlikely, however, that this fate will befall
such a well-established doctrine designed to deal with coercive behavior, a cardinal abuse of
the bargaining process--or, for that matter, that it will befall the comparably entrenched
doctrine of misrepresentation.
36. RESTATEMENT (SECOND) OF CONTRACTS § 73 (1981).
 UALR LAW JOURNAL [Vol. 5:329

A natural response would be to analyze the problem in terms of

duress. It is only relatively recently, however, that the common-law
doctrine of duress has been broadened to encompass such situations
of "economic duress." The traditional analysis of the problem pro-
ceeds in terms of the doctrine of consideration. Under that doctrine
the owner would prevail on the ground that there was no considera-
tion for his promise. All that the contractor did in return for the
new promise--of $50,000 more-was to perform a duty that he
owed under an existing contract, and under the pre-existing duty
rule, performance of such a duty is not consideration.
Note, however, an important limitation of this rule-the pre-
existing duty rule merely makes the landowner's promise to pay the
extra $50,000 unenforceable for lack of consideration. It does not
giv: the landowner a power of avoidance. If the landowner has al-
ready paid the contractor the $50,000 (as had the general contractor
in Austin v. Loral), the contractor can simply keep the money. The
pre-existing duty rule gives the landowner no right to get it back
once he has paid.
Courts have become increasingly hostile to the pre-existing
duty rule. Though it serves in some instances to give relief to a
promisor who has been subjected to overreaching, it serves in other
instances to frustrate the expectations of a promisee who has fairly
negotiated a modification. It does not, for example, distinguish be-
tween the situation where the contractor's demand for more money
is motivated merely by opportunism and greed and that where the
demand is prompted by the discovery of circumstances or the occur-
rence of events that make the contractor's performance more bur-
densome. Thus the rule would deny the contractor recovery of the
additional $50,000 regardless of whether his demand for it had been
prompted by the unexpected discovery of rock which had made his
task much more burdensome or by a suddenly acquired taste for
expensive sports cars.
It is therefore not surprising that both courts and legislatures
have made considerable inroads into the rule. Restatement Second
section 89 undercuts the rule by providing:
A promise modifying a duty under a contract not fully performed
on either side is binding (a) if the modification is fair and equita-
ble in view of circumstances not anticipated ... when the con-
tract was made. ... 37

37. Id. at § 89(a).

19821 COERCION IN CONTRACT LAW 343

The Restatement Second thus distinguishes the contractor who has

struck rock from the contractor who has acquired a taste for expen-
sive sports cars, laying down a test that approaches that of "good
faith and fair dealing" it lays down for duress by a threat to break a
contract.38
Is it not likely to occur to courts to take the next step by aban-
doning the pre-existing duty rule entirely and using the expanded39
doctrine of duress to protect parties against coerced modification?
It is true that a party claiming duress must show that the threat was
sufficiently grave to justify his assent, a burden that is not imposed
on him by the pre-existing duty rule. On the other hand, a party
who can show duress has an advantage in that he has not only a
defense if he is sued by the other party but also a ground for avoid-
ance and restitution.
This result has already been achieved by the Uniform Com-
mercial Code. Under UCC 2-209(1), "An agreement modifying a
contract within this Article needs no consideration to be binding."
Thus the pre-existing duty rule is abolished. Nevertheless, as was
pointed out earlier, a requirement of good faith and fair dealing is
imposed and "extortion of a 'modification' without legitimate com-
mercial reason is ineffective as a violation of the duty of good
faith."' 40 Thus the expanded doctrine of 4
duress is invoked to protect
parties against coerced modifications. '
I come, therefore, to two conclusions. The first is that the Re-
statement Second reflects the "progressive tendency" toward expan-
sion of the doctrine of duress, in its liberalization of both the
requirement that the threat be one that the law condemns and the
requirement that the threat be sufficiently grave to justify the vic-
tim's assent. The second is that it is not unreasonable to expect this
expanded doctrine of duress to encroach on the doctrine of undue
influence and to displace the pre-existing duty rule.

38. See supra text at note 13.

39. See Hillman, Policing Contract Modofcations under the UCC: Good Faith and the
Doctrine of Economic Duress, 64 IowA L. REV. 849 (1979).
40. See supra note 14.
41. Though the Code has no explicit requirement that the threat to break the contract
be sufficiently grave to justify the victim's assent to the modification, it would make sense to
infer a requirement that the threat leave the victim no reasonable alternative.