What Is Duress?
The term duress refers to the act of using force and/or other forms of pressure to compel someone to act against their wishes or interests. Duress is commonly used to defend individuals who are compelled or coerced to commit a crime because of the potential for serious imminent harm.
Financial duress can be caused by negative situations, such as the loss of a job or skyrocketing bills. Economic pressure can cause financial duress, leading people to commit involuntarily risky financial practices.
Key Takeaways
- Duress is the act of using force, coercion, threats, or psychological pressure, among other things, to get someone to act against their wishes.
- If a person acts under duress, they are not acting of their own free will and so may be treated accordingly in court proceedings.
- Duress can be physical, psychological, and financial.
- If an individual (or business) is under financial duress, they are often left without viable solutions to turn around their financial woes.
How Duress Works
Duress occurs when individuals feel compelled to act in a way that goes against their principles. As such, a person is under duress when they are prevented from acting (or not acting) according to their own free will. Individuals can experience duress through force, threats, false imprisonment, coercion, and/or psychological pressure. These are common reasons when defending individuals accused of committing or participating in criminal acts or acting against their conscience.
Duress also plays a part in the economic situation of individuals. Personal financial duress can be brought on in several ways, including through the loss of employment. Individuals can also experience financial duress when they lose their homes to foreclosure after defaulting on their mortgage or when their savings accounts are wiped out because of a health crisis and high medical bills. In theory, these events could lead to a person acting unlawfully due to the added stress.
Financial duress can occur internally as well. This happens when a business borrows more than is prudent or engages in questionable merger activity. These self-inflicted wounds can permanently damage a business. At other times, duress can come about because of external forces, such as the impact on a business from a widescale economic recession.
Do not confuse duress with necessity. Although both situations involve acts that go against people's wills and/or consciences, they are very different. People may be compelled to do illegal or immoral things to avoid greater harm. For instance, breaking the windows of someone's car during a heatwave to rescue a baby or pet left in the backseat is considered an act of necessity rather than duress.
Types of Duress
Duress can be classified under three different categories, which are highlighted below.
- Physical Duress: This type of duress occurs when an individual feels threatened with acts of physical violence to commit acts that go against their conscience or they may be coerced with physical harm either to themselves or someone else to commit criminal acts. For instance, a person may be told a family member will be killed if they don't sign a document transferring their assets.
- Psychological Duress: People may feel pressured to do things they don't want to under psychological duress. Examples of psychological duress include the threat of withholding necessities or demeaning individuals so they act in a certain way.
- Economic or Financial Duress: Individuals may act a certain way when the economy or their financial situation changes. For instance, the loss of employment may lead a homeowner to stop paying their rent/mortgage and/or their bills. A business manager may revise and sign a new contract under duress to appease the other party.
Things have a way of cascading negatively when a business begins to experience financial duress. Small disruptions begin to compound, leaving managers little choice but to make a series of weak decisions.
Example of Duress
Here's a hypothetical example to show how duress works. Let's say an individual makes unlawful threats or engages in coercive behavior that causes a relative to forcibly sign an agreement or execute their last will and testament. This means the person is causing their relative to be under duress.
Financial duress describes an environment where business managers make difficult decisions under stress. These suboptimal choices are often made outside of standard operating and financial conditions.
To keep a business afloat, a manager may sell an asset knowing it will disrupt business in another way. Financial duress puts the business between a rock and a hard place where no good solution exists. This situation can lead to someone acting under duress to protect their money and financial interests.
What Are the 3 Types of Duress?
The three types of duress are physical duress (which involves the threat of physical harm), psychological duress (which involves the use of psychological pressure), and economic or financial duress (which involves making decisions about finances under stress).
What Are the Requirements of Duress?
The four main requirements or elements of duress involve a reasonable amount of fear. The threat or coercion should come from an external source (although it may come internally in some cases), such as another person or a group of individuals. There is usually no reasonable way for individuals to find relief from the threat or situation. Finally, the fault doesn't lie in the individual committing the wrongful act or the crime.
How Do You Prove Financial Duress?
Financial duress occurs when an entity makes financial decisions that go against their principles. This could happen because of a change in a person's financial situation or when one party threatens or forces another to make risky choices.
To prove financial duress, Party A must demonstrate that a contract existed with Party B and that Party B threatened the termination of that contract. The final stage in proving duress lies in the fact that Party A accepts the new terms of the contract.
The Bottom Line
Duress occurs whenever there's an imminent threat of physical, psychological, and/or financial harm to an individual from an outside source. For instance, you may feel compelled to do something that goes against your will (like transferring your assets) or the law (like committing a crime) or face being killed. To prove duress, you must show that you had a contract (or relationship) with the other party and that they made some threat that led you to do something you didn't want to do in the first place.
