My ex business partner claims that I put him under duress, can you please clarify what counts as duress in a business situation.
What happened between me and him was that we ran a business together and for us to withdraw a large amount of money from the bank, both of us had to sign. As the business was drawing to a close and cracks where starting to appear.
I lost my temper when he said he was not going to sign to withdraw money from the bank. I told him that if he did not do it I would knock him out. I lost my temper I regret saying it, but he agreed anyway and did not seem scared. Now that the business has closed and we have gone our separate ways I have received a letter from his Solicitor saying that in the last withdrawal from the company’s bank account that we made, I put him under duress and he only agreed to sign because of the extreme duress I put him under.
I am not too sure whether my threats did count as duress, can you please explain what duress means in a business context?
The Answer from Solicitors Online
Duress is when actual or threatened unlawful physical violence to a person, his family or property is used to get them to agree to a contract. A threat of violence stating that if a person does not sign a contract they will get beaten up is an example of duress.
A business contract that is created as a result of improper or excessive pressure by one party or another can make the contract void.
Economic duress occurs when pressure in relation to money is used such as the actual act or threat relating to the loss of money to force a person to agree to a contract.
An example of this is when a construction company has agreed to a contract for the construction of a house at a specific price with a buyer. The construction company then refuses to complete the construction, unless the buyer agrees to pay a further 10%. The refusal by the construction company to fulfill the contract unless more money is paid will be regarded as causing the bin company economic duress.
Another example of duress is when a bin container company has a contract to supply bins to a local council. The bin company contracted with a delivery company to deliver the bins to the council. The delivery company then refuses to deliver the bins to council, unless the bin company pays them a higher price than what was agreed in the contract.
As a result of the threat of refusal to deliver which would have affected the bin company’s business, the bin company will be able to bring a legal claim against the delivery company for economic duress and be entitled to compensation.
If you need legal advice on duress or economic duress you can speak to one of our Business Solicitors online right now.