The Independent Counsel

Software Licensing


When is a Hard Bargain Duress?


BY WILLIAM F. SWIGGART

"He held a gun to my head, and told me he would pull the trigger if I didn't sign the contract," is the classic statement of duress as a means of invalidating a contract. But can duress arise in a commercial context?

Commercial duress, or "business compulsion", might be found where a company hires an independent software developer to update a piece of software it deems vital to the continued survival of the company, and instead of performing as promised, the developer threatens to withhold the update at a time when all of the company's competitors are releasing competing versions.

It is probable that onerous contract terms agreed to by the company with the developer only in order to gain access to software that it already owns would be found voidable due to commercial duress.*


© ASSOCIATION OF INDEPENDENT GENERAL COUNSEL 1994; (all rights reserved). This article is not intended as legal advice. Consult a qualified attorney for assistance concerning a specific issue or problem.