Coercion: Definition, Example and Related Terms
What is a Coercion ?
Coercion, in a commercial contract context, is when one party pushes the other into agreeing to terms without their fair and full consent. The 'pushing' is usually by means of threats or undue pressure.
In a business setting, this might look like one company threatening to end a valuable contract unless the other company agrees to new, less favorable terms. This is not fair, and it's not legal. A contract made under coercion is not valid because it lacks the free consent of all parties involved. In other words, if you were bullied into signing a contract, you have the right to say that contract is not valid.
Example(s)
Scenario Description A manufacturer threatens to stop supplying a retailer with products unless the retailer agrees to a higher price. In this scenario, the manufacturer is using coercion to push the retailer into agreeing to a new contract with higher prices. The retailer might feel like they have no choice but to agree because they depend on the manufacturer's products to stay in business. But this is not a real choice, and it's not a fair contract. The law recognizes this and says that contracts made under coercion are not valid. A software company threatens to withdraw tech support from a client unless the client agrees to buy a new, more expensive package. This is another example of coercion. The software company is using threats to force the client into a more expensive contract. The client might feel like they have to agree because they need the tech support to keep their business running. But again, this is not a real choice. The law says that contracts made under coercion are not valid.