A defendant to a breach of contract lawsuit in Texas may assert duress as a defense to both the formation of a contract and the performance of a contract. Essentially, duress as a defense indicates that one of the parties to the contract forced the other party to enter into a contract that they would not have entered into absent the other party’s wrongful actions or threats of wrongful actions. For example, duress may be a defense if the plaintiff made a credible threat to harm the defendant or defendant’s family unless the defendant entered into a contract. Duress may also exist where the plaintiff withholds or threatens to withhold something essential to the defendant’s business (like production, material, or distribution) unless the defendant enters into a new contract.
Under Texas law, duress (including economic duress) is a defense to breach of contract. Duress may be a defense in a breach of contract action if the defendant can prove the following:
- The plaintiff engaged in or even threatened to engage in unlawful conduct without any justification.
- The plaintiff’s actions or threats would destroy the defendant’s free will.
- The plaintiff’s actions or threats actually overcame the defendant’s free will and caused the defendant to enter into a contract that the defendant would not have entered into without the plaintiff’s actions or threats.
- The plaintiff’s actions or threatened actions were imminent.
- The defendant was unable to protect themselves from the plaintiff’s actions or threats.
Under the defense of economic duress, a contract may be invalid or unenforceable where the other party has taken undue or unjust advantage of the defendant’s economic necessity or distress to coerce him into making the agreement. However, courts will not invalidate a contract when the duress emanates from a third person who has no involvement with the other party to the contract. One who sustains damage as a result of duress exerted by a third person may, however, sue the third person for damages.
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