Please help Economic duress case the factual issue that led the parties to court
ID: 367491 • Letter: P
Question
Please help Economic duress case the factual issue that led the parties to court, the judge's decision, and the reasoning utilized to reach that decision.
Austin Instrument, Inc. v. Loral Corporation
Defendant Loral Corporation had a contract with the Navy in which defendant was to manufacture radar sets by a specific date. In return the Navy was to pay the defendant $6 million. The contract provided that if Loral did not meet the deadline it would have to pay a substantial amount of money specified in the contract as damages. Loral received a second contract and sought bids from several suppliers. Plaintiff Austin Instrument, Inc. threatened to discontinue unless defendant agreed to only purchase from plaintiff and increase prices paid for materials under the first contract. Defendant attempted to replace Plaintiff completely, but failed. Defendant then agreed to Plaintiff’s demands. Plaintiff sued defendant for money still due on the second contract upon completion and defendant countered suit to recover price increases under the first contract, claiming economic duress. Court ruled in favor of the defendant due to grounds of economic duress allowing a contract to become voidable.
Question:1) What similarities and dissimilarities exist between economic duress and physical duress?
2) If other suppliers had been able to deliver the goods on time to Lora, would the defense of economic duress apply to Loral?
Explanation / Answer
1) Economic duress : Unlawful use of economic pressure
Physical duress : Threat of bodily harm
Both types of duress are a compulsion by threat or violence the only difference which exist is that in economics duress financial compulsion is also inclueded whereas physical duress is solely related to physical harm.
Similarity in both the duress is that they are compulsions or contract which is made forcefully or under pressure.
2) If in case other suppliers would have been agreed to deliver the goods on time to lora the defense of economic duress would'nt apply to lora because in that case Lora would have choices from the second contract and bids from other suppliers but since there were no options left even after trying lora failed to replace Plantiff and has to agree to plantiff's demands after which plantiff sued lora for money still dues on second contract upon completion and lora countered suit to recover price increases under first contract so economic duress was applied by the court making it voidable .