The law and economics of contractual duress

Virtually all modern legal systems provide that a party who concluded a contract under unacceptable pressure has a right to avoid the offending agreement. Yet what is unacceptable is difficult to establish. Legal doctrines and economic models approach contractual duress with little communication and, therefore, at times reach divergent outcomes. In a recent TILEC discussion paper, TILEC Member Péter Cserne goes on a journey to the heart of duress and attempts to increase communication between doctrinal, jurisprudential and various economic approaches to this fluid and contested doctrine of contract law. The paper finds that in the traditional core of duress i.e. when physical threat was used, jurisprudential and economic justifications converge. It is more controversial whether the range and quality of opportunities available to the contracting parties should also matter or the doctrine should be used to promote substantive fairness or ambitious policy objectives. The paper is forthcoming as a chapter in the new 12-volume edition of the Elgar Encyclopedia of Law and Economics, one of the main references works in the field of law and economics.