Duress. In 1982, Hardy Salt Co hired William Schmalz under an employment contract that stated he was entitled to six months' severance pay if he was laid off. The company would not have to pay in the event of any voluntary separation or involuntary

Question

termination for other reasons, such as for poor performance or for cause. In mid-1983, Schmalz was asked to resign after having an affair with the chairman's executive secretary. Schmalz was told that if he did not resign he would be fired but that if he did resign the company would keep him on the payroll for another six weeks. Schmalz resigned and signed an agreement releasing Hardy Salt from any liability for breach of the employment contract. Schmalz later claimed that he had signed the release under duress and sued Hardy Salt for the six months' severance pay under his employment contract. Discuss whether Schmalz's claim for duress should succeed.

Answer 1

Duress
Schmalz should not succeed. To claim duress in avoiding a contract, a person must be so oppressed from the wrongful conduct of another as to deprive him or her of free will. Usually, there must be an improper threat such as blackmail or a threat of physical harm. Economic need is generally not sufficient to constitute duress, even when one party exacts a very high price for an item the other party needs. Financial necessity of a party, not caused by the other party to a contract, does not constitute duress. Schmalz's financial necessity was not caused by his employer, but resulted from his own conduct. Hardy Salt had the right to fire Schmalz or demand a resignation, and therefore it was not improper for them to threaten to fire Schmalz if he did not comply.