In assessing the impact on the party complaining about the duress, the court considers four factors: As phrased in PIAC, a recent case by the United Kingdom Supreme Court, it is not acceptable to “directly maneuver the claimant into a position of vulnerability”.
The key principle from all of these cases is that using an imbalance in bargaining power is entirely legitimate, but creating an imbalance in bargaining power by one’s own breach is not.
#DURESS IN REAL ESTATE CODE#
In a related context, it could be illegitimate for a landlord, whose non-compliance with the building code caused a flood, to refuse to provide a rent reduction unless the franchisee releases it from claims related to the flood.It is illegitimate to threaten to terminate a franchise agreement unless the franchisee makes a staffing change not required under the franchise agreement and.It is illegitimate to threaten to terminate a franchise agreement unless the franchisee pays a fee not listed in the franchise agreement.It is illegitimate to threaten to refuse to perform terms of an agreement unless the other party provides additional consideration, i.e.On the other hand, it is illegitimate to refuse (or threaten to refuse) to perform obligations already incurred to pressure a party into making concessions. It is legitimate to threaten to refuse to renew an agreement at the end of its term if the other party has no right to extend it.It is legitimate to threaten to terminate a franchise agreement where the franchisee breached the agreement and the franchisor has a right to terminate for that breach and.It is legitimate to insist on performance of any terms of a franchise agreement, even if those terms are “onerous”.This is normal and acceptable commercial pressure, which courts have regularly accepted. The doctrine of economic duress does not prohibit exploiting terms of an existing agreement to pressure a party into making concessions. It was in a position where it had “no realistic alternative but to submit”.The other party applied illegitimate pressure and.To establish economic duress, a party must show that: This doctrine recognizes that, where one party extracted a promise via a “coercion of the will”, the other party did not truly consent. This article summarizes the test for economic duress, how it has been applied in the franchise context, what questions remain unresolved, and some takeaways.Įconomic duress, also known as lawful act duress, can be raised as a defence to a claim for breach of contract.
In some circumstances, this can amount to economic duress, justifying franchisees’ refusals to comply. Franchisees may feel pressured to accede to these demands because their livelihoods depend on cooperating with their franchisors. Sometimes, however, franchisors make demands beyond their strict rights under the franchise agreements. Usually, that control is explicitly authorized by the franchise agreement. For many reasons including the need to control their brands, franchisors exert considerable control over franchisees’ businesses.
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