In the case where a party alleges that they entered into a contract “under duress” and it is the other party to the contract who they claimed forced them into entering the contract “under duress”, there is no question that, should duress be found, the party under duress has a defense to performance under the contract. However, what happens if the duress is caused by a third-party? It is not a defense to enforcement of the contract unless the other party to the contract knows of the duress being caused by the third-party, or so the Second Appellate District ruled in Fettig v. Hilton Garden Inns Management LLC.

In that case, Fettig tried to escape a settlement she put on the record in Court. She claimed her trial lawyer forced her to take the deal. The case settled during trial for $85,000.00 to Fettig in exchange for a release of Fettig’s claims arising from being run over by a Hilton hotel shuttle bus.

Months after the settlement, new counsel for Fettig brought a motion to set aside the settlement on the basis that Fettig’s prior counsel had placed Fettig under duress to take the settlement by telling her off record, “the defense will take your house for costs” and that he would not continue to represent her if she didn’t accept the settlement. The trial court and the Appellate Court denied Fettig relief.

The Appellate Court held:

The court rightly refused to rescind the contract. It properly applied governing contract law, including the Restatement Second of Contracts.

With our emphasis, the Restatement Second of Contracts provides as follows:

“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.” (Rest.2d Contracts, § 175.)

Should you feel under duress to sign an agreement, discuss it before you sign it with trusted legal counsel, especially if it is your legal counsel that makes you feel under duress. Then, you will know it is not time to panic. It is time to get a second legal opinion.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.