Legal Question in Business Law in New York

If modified contract is under duress, is original contract still good

X enters a business contract with Y and Z. The contract states that X is to receive 15% of the profits. X performs his part of the contract. Y and Z decide later that 15% is too much and do not perform their part of the contract, causing X to be in a terrible financial position.

Upon meeting, Y and Z state that original contract never held weight (fraud?), but they are willing to create a new contract with X (in which he wouldn't share the profits). It would be a standard employment contract with a fixed salary, commission, etc., and would certainly not bring in as much income for X as agreed to in the original contract. X's back is against the wall, financially, and thus it is difficult to say no.

Although one might suggest that X probably has a pretty good case for the original agreement (breach of contract, fraud?), X is in no position to initiate a law suit do the financial position he is now in. If he signs this new contract, is it considered under economic duress? If so, and things don't work out, does X still have a potential lawsuit for the original agreement?

Any thoughts would be GREATLY appreciated...


Asked on 8/12/03, 3:11 pm

2 Answers from Attorneys

Michael Paradise Law Offices of Michael S. Paradise

Re: If modified contract is under duress, is original contract still good

Under your fact scenario, it would seem to be a tough case to allege duress. X could simply reject the "settlement offer" and pursue his legal remedies. As for signing it and pursuing a case based on the original breach, it depends what the superseding contract says. A good lawyer should insert strong "release" language in the subsequent contract, terminating the prior one and releasing both sides from any claims or liability.

This answer is general in nature and should not be construed as legal advice.

Good luck

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Answered on 8/12/03, 3:30 pm
Kenneth J. Ashman Ashman Law Offices, LLC

Re: If modified contract is under duress, is original contract still good

The facts you offer are sketchy and general in nature. Accordingly, this response is the same.

Economic duress is very difficult to establish. Without knowing greater factual detail, my hunch is that economic duress would not be established under your fact pattern, absent some additional information as to your dire financial condition.

Typically, if you sign a new agreement, it will say that it supercedes any prior agreements between the parties (known as a integration clause). It may also contain a release of prior claims.

If the amounts at issue are truly significant, you might want to find an experienced business litigator who would be willing to accept the representation on a contingent fee basis and, in the meantime, hunt for another job. (Although if successful in the lawsuit, the damages you suffered by virtue of lost income for being out of work would also seem compensible.)

-- Kenneth J. Ashman; www.AshmanLawOffices.com; [email protected]

The information provided by Ashman Law Offices, LLC (�ALO�) is for general educational purposes only. No attorney-client relationship is established by this communication and no privilege attaches to such communication. ALO is not taking and will not take any action on your behalf and will not be considered your attorney until both you and ALO have signed a written retention agreement. There are strict deadlines, called statutes of limitation, within which claims or lawsuits must be filed. Therefore, if you desire the services of an attorney and decide not to retain ALO on terms acceptable to ALO, you should immediately seek the services of another attorney.

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Answered on 8/14/03, 12:07 am


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