Duress

What Is Duress?

Duress describes the act of using force, false imprisonment, coercion, threats, or psychological pressure to compel someone to act contrary to their wishes or interests.

Duress is also used as a form of defense to a crime by a defendant who is compelled or coerced to commit the crime because they are under serious imminent harm to themselves or others.

Unlawful practice of economic pressure can cause duress to a person, risking them to commit involuntarily to a risky financial practice as well.

How Duress Works

Duress occurs when a person is prevented from acting (or not acting) according to free will. Forms of duress could fall under threatened physical harm or economic duress.

If duress is used to make a person commit a crime or do something against their will, the defendant in a criminal prosecution may raise the defense that others used duress to force them to take part in the crime.

Example of Duress

For example, if Bob makes unlawful threats or engages in a coercive behavior that causes his Aunt Sally to sign an agreement or execute a will against her will, then Bob is causing Aunt Sally to be "under duress."

Financial duress describes an environment when business managers make difficult decisions under stress. These suboptimal choices are often made outside of standard operating and financial conditions. For example, to keep a business afloat, a manager may sell an asset knowing it will disrupt business in another way. In a sense, financial duress puts a business between a rock and a hard place where no good solution exists. This situation can lead to someone acting under duress to protect their finances.

When a business begins to experience financial duress, things have a way of cascading negatively. Small disruptions begin to compound, leaving managers little choice but to make a series of weak decisions.

Special Considerations

Personal financial duress can be brought on in a couple of ways. For example, a person can lose their job, or end up foreclosing on their home when they are unable to pay their mortgage. A health crisis and high medical bills could wipe out a savings account. In theory, these events could lead to a person acting in an unlawful manner due to the stressfulness of the situation.

Financial duress can be internal in nature, such as when a business borrows more than is prudent or engages in questionable merger activity. These self-inflicted wounds can permanently damage a business. Other times, duress can come about because of external forces, such as the impact on a business from a widescale economic recession.