1 George Mason School of Law Contracts II Duress Not to be shared © F.H. Buckley [email protected].
Dec 31, 2015
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The highwayman
Lee Marvin, as highwaymanLiberty Valance, holding up wimpy Jimmy Stewart, The Man Who Shot Liberty Valance (John Ford, 1962)2
Stand and deliver!
Duress makes a contract voidable
§175(1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.
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Duress makes a contract voidable
§175(1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.
§176(1) A threat is improper if what is threatened is a crime or a tort…
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Physical Duress is an easy one
Restatement § 174: where assent “is physically compelled by duress
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The Highwaymen 1962Steve Trott on the far left
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Ninth Circuit Judge Steve Trott
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The Highwaymen 1996
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The HighwaymenTheir Opening Act
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Was that duress?
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Was that duress?
Assume I have the right to do x (sue Johnny Cash) When is it wrongful to say “I will do x
unless you do y”
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Was that duress?
Is the general principle that, provided one has the right to do x, one is permitted to extract some advantage by a threat to do x?
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What about blackmail, then?
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David Letterman
Improper threats
Does the blackmailer have the right to reveal that Letterman preyed on his female staffers?
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Improper threats
Does the blackmailer have the right to reveal that Letterman preyed on his female staffers?
Does the blackmailer have the right to ask Letterman for money?
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Improper threats
Does the blackmailer have the right to reveal that Letterman preyed on his female staffers?
Does the blackmailer have the right to ask Letterman for money?
Does the blackmailer have the right to ask Letterman for money and to tell him he will reveal the information if he is not paid?
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Improper threats
Does the blackmailer have the right to ask Letterman for money and to tell him he will reveal the information if he is not paid?
How do two rights make a wrong? What might make the threat “improper”
under Restatement § 175?
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Improper threats
What might make the threat “improper” under Restatement § 175?
§176(1) (1) A threat is improper if what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property And Blackmail is a crime
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Blackmail: The Reality Show
How would life be different were blackmail legalized?
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Blackmail
How would life be different were blackmail legalized? Blackmail Inc.: more resources expended
to discover dirt.
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Blackmail
Is that the kind of world we want? If not, why not?
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So what was the duress in Wolf v. Marlton at 403?
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What was the duress in Wolf v. Marlton?
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A white crowd gathers on the front porch at 1863 E. 70th Street in South Los Angeles, where W.H. Whitson planned to sell his home to a black family. Sept. 7, 1949, LA Weekly
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Was that duress?
What did the Δ’s do in the end?
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Was that duress?
What did the Δ’s do in the end?
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4th Grade Class, Beeler Public School,Marlton NJ, 2007
Was that duress?
Didn’t the plaintiffs have the right to buy the house and sell it to whomever they wanted?
And didn’t they have the right to ask for their deposit back?
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Was that duress?
Did the plaintiffs have the right to buy the house and sell it to whomever they wanted? “A threat may be wrongful even though
the act threatened is lawful.”
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Was that duress?
Did the plaintiffs have the right to buy the house and sell it to whomever they wanted? “A purely malicious motive”
Define malice
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Malice: Restatement § 176(2)(a)
“A threat is improper is 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”
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Can there be duress without malice?
Is this case like Hochman at 407?“Further instructive is…”
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Can there be duress without malice?
Is this case like Hochman at 407?“Further instructive is…” Advantage-taking?
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Is Chouinard at 416 consistent with Hochman?
“mere hard bargaining”
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Improper threats
The threat to bring criminal proceedings. Restatement § 176(1)(b) A threat is
improper if what is threatened is a criminal prosecution
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Improper threats
The threat to bring bad faith civil proceedings. Restatement § 176(1)(c) A threat is
improper if (b) what is threatened is the use of civil process and the threat is made in bad faith
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Austin v. Loral at 409
Why did Loral agree to the contract modification?
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Austin v. Loral
A situational monopoly: Loral can’t get the equipment from anyone except Austin, and must have it
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Austin v. Loral
A situational monopoly: Loral can’t get the equipment from anyone except Austin, and must have itA classic case of post-contractual
opportunism
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Austin v. Loral
Suppose you had been counsel for Austin? How might you have amended your pleadings?
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Alaska Packers
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Restatement § 73. Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from whatwas required by the duty in a way which reflects more than a pretense of bargain.
Alaska Packers
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Restatement § 89 MODIFICATION OF EXECUTORY CONTRACT. A promise modifying a duty under a contract not fully performed on either side is binding (a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or (b) to the extent provided by statute; or (c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.
Rescue at Sea
How do Admiralty Courts handle rescue claims? Post v. Jones at 417
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Rescue at Sea
How do Admiralty Courts handle rescue claims? Post v. Jones What would an efficient rescue contract
look like?
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Rescue at Sea
How do Admiralty Courts handle rescue claims? Post v. Jones What would an efficient rescue contract
look like? It would minimize all Social Costs
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Rescue at Sea
How do Admiralty Courts handle rescue claims? Post v. Jones What would an efficient rescue contract
look like? Social Costs = all costs associated with
the possibility that the ship will be lost PLUS the rescue costs
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Rescue Contracts
If the parties can reach an agreement, the rescuer will attempt a rescue provided that L > R, where: L = the cost of the loss if no rescue R = the cost of the actual rescue
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Rescue Contracts
The rescuer will attempt a rescue* provided that L > R, where: L = the cost of the loss if no rescue R = the cost of the actual rescue
The bargaining surplus to be divided between them is thus L – R.
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Rescue Contracts
Suppose that the rule of duress prevented the rescuer from bargaining for any recovery
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Rescue Contracts
Suppose that the rule of duress prevented the rescuer from bargaining for any recovery How much would the rescuer invest in R?
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Rescue Contracts
Suppose that the law imposed a positive Good Samaritan duty to rescue (and assume rescue costs R)?
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Rescue Contracts
One tends to assume that the rescuer scoops the entire bargaining surplus of L – R. Do you think this is what happened in Post v.
Jones?
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Ex Ante Rescue Contracts
Suppose that rescuer and victim could bargain ex ante for a rescue, before the victim embarked on his voyage How could such a thing exist?
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Ex Ante Rescue Contracts
How could such a thing exist?
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Ex Ante Rescue Contracts
How could such a thing exist?
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Ex Ante Rescue Contracts
Suppose that rescuer and victim could bargain ex ante for a rescue, before the victim embarked on his voyage Both parties might want to invest in pre-
rescue care
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Ex ante Rescue Contracts
By investing in pre-rescue care x the victim can reduce the probability that he’ll need to be rescued And how would he do this?
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Ex ante Rescue Contracts
By investing in pre-rescue care x the victim can reduce the probability that he’ll need to be rescued And how would he do this?
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Ex ante Rescue Contracts
By investing in pre-rescue care x the victim can reduce the probability that he’ll need to be rescued He might take extra precautions or extra
care He might avoid dangerous places
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Ex anteRescue Contracts
By investing in pre-rescue care y the rescuer can increase the probability of a successful rescue. He might take extra precautions or extra
care He might frequent dangerous places
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Rescue Contracts Suppose that the rule of duress limited
the rescuer to a recovery of R upon a rescue. How much would the rescuer invest in
pre-rescue care y?
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Efficient Rescue ContractsOn Dry Land?
Livingston is an explorer who finds himself without food or water, alone in the desert. After a week he comes across an inn, owned by Conrad. “I’ll give you food and water,” says Conrad, “in exchange for all your money.” Livingston is a millionaire. “Think it over…,” says Conrad.
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Efficient Rescue ContractsOn Dry Land?
Might Conrad possibly be unhappy with this result?
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Status obligationsHale, De portibus maris
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Status obligationsHale, De portibus maris
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There cannot be taken arbitrary and excessive duties for cranage, wharfage, [etc.,] neither can they be enhanced to an immoderate rate, but the duties must be reasonable and moderate, though settled by the king's license or charter. For now the wharf and crane and other conveniences are affected with a publick interest, and they cease to be juris privati only...
So who owes Status Obligations?Innkeepers
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So who owes Status Obligations?
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Physicians
Restaurants
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