Concept of Coercion

In contract law, coercion is the act of compelling someone to enter into a contract against their will by using force, threats, or undue pressure. As a result, the individual is deprived of exercising independent judgment and freely consenting to the terms of the contract. Physical violence, blackmail, intimidation, or threats of harm may all constitute forms of coercion.

An act of coercion, such as the use of force or threats, is required to establish coercion. It can be overt or covert, but it must be sufficient to influence the decision-making process of the coerced party. In addition, the coerced party must be threatened with imminent harm. It may be directed at the coerced party themselves, their family, reputation, or property. Finally, there must be a causal link between the threat and the contract. The coerced party must demonstrate that they would not have entered into the contract if not for the threat.

Legal Effects of Coercion

Contracts formed under coercion are voidable at the option of the coerced party. Therefore, the coerced party may either affirm the contract or seek its avoidance. A coerced party who affirms the contract remains bound to its terms and remains enforceable. In any case, if the coerced party chooses to avoid the contract, it is treated as if it never existed, and the parties are reinstated to pre-contractual positions.

The legal effects of avoidance due to coercion vary depending on the jurisdiction. If the coerced party wishes to avoid the contract, they must inform the other party within a reasonable time after the coercion has ended or the threat has been lifted. It may be necessary for the party seeking to avoid the contract to provide evidence of coercion, such as witness testimony.

A third party’s rights may be protected if they acquired rights under the contract without knowledge of coercion and in good faith. As long as the innocent third party acquired its rights in the contract without knowledge of the coercion, it may be possible to enforce the contract against the coerced party.

In addition to the civil consequences, coercion may also give rise to criminal liability. The act of coercion can be a criminal offense in many legal systems. The coercing party may be punished by fines, imprisonment, or other punitive measures if found guilty of coercion.

Coercion in contracts is used to ensure that agreements are entered into voluntarily and without force or threat in order to protect the principle of free consent. As a result of the law, a mechanism is provided to rectify situations where the principle of free consent has been compromised by allowing the coerced party to avoid the contract.

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Smirti

(Founder of Management Notes)
MBA,BBA.

I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.

I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,

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Concept of Coercion – Legal Effects of Coercion | Business Law