● When determining if threat is credible - “The age, sex, capacity, relation of the parties and all the attendant circumstances must be considered.” Austin Instrument, Inc. v. Loral Corp : P seeks to recover price difference on grounds of economic duress. P had contracts with the US Navy to produce radar sets and L agreed to subcontract certain parts, then D told P that they would have to raise the price or D would stop delivery. P acceded to D’s demands b/c it could not find the parts from anyone else. ● Economic Duress: A wrongful threat that precludes free will. Proof: 1) immediate possession of needful goods is threatened (threat to breach) 2) unable to obtain goods elsewhere. ● Threat to stop delivery = wrongful threat, precluding exercise of free will ● P x want to jeopardize relationship w/ gov., adequate under these circumstances to agree and seek recovery later. ● P had no other means to obtain materials needed. ● Re. 175 - contract is voidable, P recovers difference. Machinery Hauling, Inc. v. Steel of West Virginia : P contracted with D to purchase steel and have it delivered to a third party. D told P the steel was unmerchantable and the third party rejected it and directed P to return the last three loads to D. D told P that if it did not pay $31K it would cease doing business with P with a potential loss of over $1M/yr. ● This was NOT duress b/c the demand was not coupled with threat of termination or an existing contract ● P didn’t give into the demands = x overbear their free will = no ED ● The claim of loss future business is not viable for economic duress, future expectancy isn’t a legal right to claim duress. ● Re. 176(2) - this case doesn’t meet the improper threat test. Williams v. Walker Thomas Furniture Co. : P bought several things from D through installment plans. D then repossessed all items for payment default by a clause that claimed D still had title to all items until balance is completely eliminated. P appealed claiming (1) Mutual Misunderstanding (2) contracts were against public policy. ● Re claim (1): it was P’s fault for not reading the contracts, she assumed the risk. ● Re claim (2): Although D knew P had limited resources, and it may have been morally irresponsible to sell her expensive items, it’s not against the law by means of fraud or misrepresentation, or public policy. On Appeal: ● Applies the newly passed UCC 2-302 - unconscionability - an absence of meaningful choice on the part of one of the parties (determined by considering all circumstances surrounding the transaction) together with contract terms which are unreasonably favorable to the other party (unduly harsh terms) ● The presence of a meaningful choice is Many times meaning choice is negated by gross inequality of bargaining power - Did both parties have a reasonable opportunity to understand the contract?
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