Maco, Inc. and Kent contracted for Kent to provide Maco certain consulting services at an hourly rate of $20. Kent’s normal hourly rate was $90 per hour, the fair market value of the services. Kent agreed to the $20 rate because Kent was having serious financial problems. At the time the agreement was negotiated, Maco was aware of Kent’s financial condition and refused to pay more than $20 per hour for Kent’s services. Kent has now sued to rescind the contract with Maco, claiming duress by Maco during the negotiations. Under the circumstances, Kent will
a. Win, because Maco refused to pay the fair market value of Kent’s services.
b. Win, because Maco was aware of Kent’s serious financial problems.
c. Lose, because Maco’s actions did not constitute duress.
d. Lose, because Maco cannot prove that Kent, at the time, had no other offers to provide consulting Services
Answer:C
Duress is any wrongful threat or act of violence made toward a person (or his family) which forces a person to enter into a contract against his will. For duress to be present a threat must be made and the threatened party must believe that the other party has the ability to carry out the threat. In this situation, Maco’s actions did not constitute duress. Kent’s safety and property were in no way threatened by Maco and Kent was able to validly consent to the contract.
Answers (a) and (b) are incorrect because regardless of Kent’s financial problems and the FMV of Kent’s services, duress was not present in that Kent was able to enter into the contract at will.
Answer (d) is incorrect because Maco does not need to prove that Kent had no other offers to provide financial services.