Contract Law Voidable Contracts

VOIDABLE CONTRACT

Unit 3 A1: Mutual Agreement

From the onset, it would be prudent to note that a voidable contract could be conceptualized as an agreement whose enforceability, from a legal standpoint, could be affected by several reasons or factors (Turner 137). The said reasons, according to Turner, could be inclusive of, but they are not limited to; undue influence, duress, mistake, misrepresentation, fraud, etc. (137). There are numerous voidable contract cases that have been heard and determined in the past. One such case happens to be Weinberg v. Baharav, 553 S.W.3d 131 (2018). In essence, this particular case leans on duress and undue influence.

According to Blum, in the case highlighted above, “Weinberg alleged that he had been induced to enter into an agreement to pay investors in his real estate business by a threat from the investors…” (454). More specifically, Weinberg made an observation to the effect that the said investors had threatened him with criminal charges if he failed to sign an agreement promising to pay them. To offer a background of the case, it should be noted that Weinberg was actively involved in the buying and selling of real estate properties. His ideal business model involved the purchase of a property at a reasonable price, renovation of the said property, and resale at a profit. The funds that Weinberg deployed in this enterprise were sources from external investors. These investors would benefit following a distribution of profits after a sale. In some rare cases, the prevailing property prices meant that a real estate property would need to be held for a certain period of time so as to reap some profits from a resale. In the scenario that triggered the suit, the market conditions made it impossible for Weinberg to get an ideal offer for the property portfolio he held. As time went by, his investors became impatient and demanded their funds back. Weinberg deemed the prevailing prices extremely unfavorable and could not ‘dump’ the properties. He instead entered into an agreement with the investors committing to make periodic payments so as to settle the amounts owed to investors. However, at some point, Weinberg stopped advancing the payments to the investors as per the agreement, and he was promptly sued for breach of contract.

Weinberg embraced a duress affirmative defense. On this front, he pointed out that he had been coerced to enter into an investor payment agreement. As Blum observes, Weinberg noted that the said investors had been clear on their intention to file criminal charges against him if he failed to sign the agreement (454). More specifically, Weinberg was threatened with the criminal charge of investment funds misappropriation. In his declaration, Weinberg observed that a charge of this nature would have been detrimental to not only his own wellbeing, but also that of his family. This is more so the case given that his entire business was built on the model of trust and such charges would effectively result in bad public image and consequently, loss of future business and profitability. Further, he asserted that his dad was a well-known Rabbi and such a charge would bring disrepute to his name. For these reasons, at the time of signing the agreement, Weinberg felt cornered. In was under this coercion and duress that he signed the agreement. He termed his move as an attempt to accommodate the demands of his investors in an attempt to ensure that they did not act on the threat of instituting criminal accusations against him. In the words of Blum, it is on the strength of these arguments that “the court permitted Weinberg to proceed to trial on the duress defense, holding that the threat of criminal prosecution is a misuse of the criminal justice process and therefore an improper threat” (454).

According to McKendrick, under common language usage, duress could be perceived as the utilization of psychological intimidation tactics or actual threat to induce someone to act contrary to his or her will (279). The author further points out that duress comes in handy in the law of contract as a way to challenge or invalidate a contract. In the case presented in this text, it is clear that Weinberg did not voluntarily sign the agreement. McKendrick points out that courts routinely scrutinize facts of the case in their efforts to establish whether a party ought to be released from a contractual obligation on this front. This is more so the case given that the mere assessment of whether the ability of a party to make an informed decision was affected by threat or psychological pressure is largely a subjective issue.