Contracts are built on the assumption that parties enter into them freely, with full knowledge of what they are agreeing to and genuine willingness to be bound. This assumption is so fundamental to contract law that when it fails, the entire agreement can be set aside. While the previous lessons in this course examined misrepresentation and mistake, this lesson addresses three related but distinct doctrines that attack the very foundation of contractual consent: duress, undue influence, and unconscionability. Each of these doctrines recognizes that a signature on a contract does not always reflect true agreement, and that the law must protect parties who have been pressured, manipulated, or exploited into transactions they would not otherwise have accepted. For Canadian business owners, non-profit operators, and professionals, understanding these concepts is essential both for protecting your own interests and for ensuring that your business practices do not inadvertently create agreements that courts may later refuse to enforce.
The doctrine of duress addresses situations where consent to a contract has been obtained through illegitimate pressure or threats. At common law, which governs contractual relationships in British Columbia, Alberta, Saskatchewan, Ontario, and most other Canadian provinces, duress historically required physical coercion or threats of violence. Modern Canadian law has expanded significantly beyond this narrow conception. Today, economic duress is recognized as a valid ground for avoiding a contract, though the threshold remains high. Economic duress arises when one party uses illegitimate economic pressure to compel the other party's agreement, leaving that party with no practical alternative but to submit. The key elements that courts examine include whether the pressure applied was illegitimate, whether that pressure left the victim with no reasonable alternative, whether the victim protested at the time, and whether the victim took steps to avoid the contract once the pressure was removed. Importantly, ordinary commercial pressure does not constitute duress. Hard bargaining, even aggressive negotiation tactics, will not generally provide grounds for avoiding a contract. The pressure must be wrongful in nature, such as a threat to breach an existing contract unless additional payments are made, or a threat to commit an unlawful act. In Quebec, the Civil Code of Quebec addresses similar concerns through its provisions on consent, specifically articles dealing with fear induced by violence or threats, as of the date of authorship. The Civil Code recognizes that consent must be free and enlightened, and that a contract may be annulled where consent was vitiated by fear of serious injury to the person or property of the contracting party or of a close relative. The Quebec approach focuses on the effect on the victim's will rather than the nature of the threat, though the result in most cases aligns with the common law provinces.