R2d § 175
When Duress by Threat Makes a Contract Voidable
(1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim. (2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.
Professor's notes
Elements: (1) if a party's manifestation of assent is induced by an IMPROPER threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim; (2) if induced by a third party, voidable unless the other party in good faith and without reason to know gives value or materially relies.
Alaska Packers illustrates classic economic duress: mid-voyage threat to stop fishing left the company no reasonable alternative.
Barrer v. Women's National Bank operationalizes consumer duress in lending.
Common misunderstanding: students think "duress" means physical threat. Modern doctrine reaches economic duress and improper threats (§ 176): threats of crime, tort, bad-faith civil process, or use of confidential information. The "no reasonable alternative" element is doing most of the work; courts ask whether market or legal remedies were realistically available.
Cases that operationalize this rule
Text
R2d § 175. When Duress by Threat Makes a Contract Voidable.
(1) If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.
(2) If a party’s manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.