Duress and undue influence - Next Generation Bar Exam

1. What elements make a contract voidable for duress by threat?

   An improper threat that induces assent and leaves the victim no reasonable alternative. The test is subjective as to inducement and objective as to whether a reasonable alternative existed.

2. What is the effect of a contract induced by undue influence?

   It is voidable by the victim. As with duress by threat, the victim may avoid or ratify.

3. When is a threat to bring a civil lawsuit improper?

   When it is made in bad faith. A good-faith threat to pursue a legal claim is legitimate pressure.

4. What is the effect of a contract obtained by physical compulsion?

   It is void, because the victim never manifested assent. Physical compulsion, such as guiding a person's hand to sign, means there is no contract at all.

5. What is the effect of a contract induced by an improper threat?

   It is voidable by the victim. The victim may avoid the contract or ratify it.

6. How does a victim of duress lose the power to avoid the contract?

   By affirming it after the duress ends, including by unreasonable delay in seeking avoidance. Ratification once the coercion has lifted makes the contract binding.

7. A hospitalized elderly patient, dependent on her caretaker, signs over her house to him after his repeated urging. What doctrine allows her to avoid the transfer?

   Undue influence. The relationship of dependence and the unfair persuasion support avoidance even without any threat.

8. How does the Restatement (Second) classify a threat of criminal prosecution used to obtain assent?

   As an improper threat. The threat is improper even if the person threatened has committed a crime.

9. Under the Restatement (Second), when is a threat to breach a contract improper?

   When the threat would breach the duty of good faith and fair dealing. A threat to breach in order to extract concessions without a legitimate reason is the classic basis for economic duress.

10. A supplier threatens to stop deliveries midway unless paid 30 percent more, and no substitute is available in time. What defense does the buyer have to the increase?

    Economic duress, making the modification voidable. A bad-faith threat to breach that leaves the buyer no reasonable alternative is an improper threat.

11. What is undue influence?

    Unfair persuasion of a person who is under the persuader's domination or in a relationship of trust with the persuader. The focus is on the vulnerability of the victim and the unfairness of the persuasion, not on a threat.

12. When does duress by a third party not make a contract voidable?

    When the other party, in good faith and without reason to know of the duress, gave value or materially relied. An innocent party who did not participate in the duress is protected.

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