Brief Fact Summary.
Plaintiffs sued for breach of contract, when Defendant retained Plaintiffs’ down payment. The trial court found in favor of Plaintiffs. Defendant appealed.
Synopsis of Rule of Law.
An act or threat that involves an abuse of legal remedies or that is wrongful in a moral sense may constitute duress even though the act or threatened act was within the actor’s legal rights.
Under the modern view, acts or threats cannot constitute duress unless they are wrongful; but a threat may be wrongful even though the act threatened is lawful.View Full Point of Law
The Wolfs (Plaintiffs) contracted to purchase a house that Marlton Corp. (Defendant) was to build in its residential development. Plaintiffs put down a deposit of $2,450, which Defendant was entitled to keep under the terms of the contract if Plaintiffs failed to make additional payments on the house. During construction, Plaintiffs ran into marital troubles and told their lawyer that they did not want to complete the sale. Accordingly, Plaintiffs’ lawyer told Martin Field of Defendant that if he did not agree to a settlement and let Plaintiffs out of the contract, Plaintiffs would resell the house “to a purchaser who would be undesirable in [Defendant’s] tract.” Field testified: “[the lawyer stated] that if we did not accept his offer it would be the sorriest move that I ever made in my building career. I accepted it as a threat, and I felt that at this point it was impossible to go ahead and continue with this thing.” As a result of this conversation with Plaintiffs’ lawyer, Defendant informed Plaintiffs that the sale would not be consummated on account of Plaintiffs’ material breach, and because of that breach, Defendant was retaining the down payment. Plaintiffs sued for breach of contract, claiming that they were always ready, willing, and able to perform under the contract. The trial court held that Defendant refused to perform and found in favor of Plaintiffs. Defendant appealed.
Whether an act or threat may constitute duress if the act or threatened act was within the actor’s legal rights.
Yes. The case is remanded for proceedings consistent with this opinion. An act or threat that involves an abuse of legal remedies or that is wrongful in a moral sense may constitute duress even though the act or threatened act was within the actor’s legal rights.
Generally, moral or economic duress is treated no differently than physical duress as duress is judged “not by the nature of the threats, but rather by the state of mind induced thereby in the victim.” And an act or threat does not constitute duress unless it is wrongful. But, an act or threat that involves an abuse of legal remedies or that is wrongful in a moral sense may constitute duress even though the act or threatened act was within the actor’s legal rights. In the case at bar, Plaintiffs would have been within their legal rights to complete the purchase of the house and then immediately resell it to an undesirable buyer whose presence in Defendant’s development would hurt the company’s business. However, their reselling to a particular, undesirable buyer for the sole malicious purpose of ruining Defendant’s business is wrongful and could constitute duress even though it would have been within Plaintiffs’ legal remedies. The trial court alluded to, but never fully adjudged whether Plaintiffs’ lawyer actually threatened Field. If the lawyer threatened Field and Field believed that the threat would be fulfilled, Defendant would have been justified in its treatment of the contract as breached.