Question

Mimi operates Mimi’s Cupcakes, a single store in College Station. She claims that her cupcakes are from an old family-recipe and that is why her shop is so successful. Cakes ‘R Us is a national chain with 1,000 stores in all 50 states. Cakes “R Us claims that Mimi has stolen its proprietary recipe (she did not). Cakes ‘R Us threatens to file a civil lawsuit against Mimi for $1 Million in damages unless she agrees to a contract to share 50% of her profits with the Cakes “R Us. Because she cannot afford an attorney or the cost of litigation, she reluctantly agrees. Later, when Mimi does not share her profits with Cakes ‘R Us, the company sues her for breach of contract. Mimi seeks to defend herself by claiming both undue influence and duress. Under these limited acts, will a court recognize either defense, and explain why or why not.

Answer 1

The term duress refers to the act of using threats or psychological pressure to force another person to behave in a manner which is contrary to his wishes. In contract law, duress is often used as a form of defense to get the contract set aside where a person had used threats or psychological pressure to force the person claiming the use of duress to enter into the contract against his wishes. Undue influence takes place when a person tries to take advantage of a position of power over another person or party. Undue influence is also used also used as a form of defense in the courts to get a contract declared void. The presumption of undue influence may arise in the cases where there is a wide and big gap in the stature of the parties and where one party is so big and influential that it is in a position to put pressure that may be unfair and unjust.

Yes, the court will recognize the defense of undue influence and duress if Mimi can prove it. In this case, Mimi did not steal the proprietary recipe of Cakes ‘R Us but Cakes ‘R Us threatened to file a civil lawsuit against Mimi to coerce her into signing the contract. As Cakes ‘R Us is a big and influential Corporation with 1000 stores whereas Mimi is a small business woman with just one store, the presumption of undue influence would arise and since Cakes ‘R Us used threats to file a lawsuit to force Mimi into signing the contract, there is use of duress as well.

A person may be able to avoid the consequences of his or her acts under the law if they were performed under duress or undue influence or both. The contract signed by Mimi under duress is voidable by the party who was coerced into signing the contract. Hence, Mimi has taken the correct defese for defending the suit against her. If she is able to prove in the court that she is the aggrieved party because Cakes ‘R Us has used undue influence and duress to gain an undue advantage over her by forcing her to sign the contract, the court can declare the contract null and void. The court can also award compensation if the court feels it is warranted by the merits of the case.