Cheshire Oil Co. v. Springfield Realty Corp. - 118 N.H. 232, 385 A.2d 835 (1978)

Rule:

In addition to the basic definitional requirement that the coercion be directed toward business interests, further requisites for a finding of business compulsion exist. First, one side must have involuntarily accepted the terms of another. It must appear that the consent was actually induced by the pressure applied and would not have been given otherwise. This pressure does not have to be such as to overcome the will of a brave or courageous man, or even that of a man of ordinary firmness, but is sufficient if it in fact overcomes the will of the person against whom it is applied. Second, the coercive circumstances must have been the result of the acts of the opposite party. A contract signed because a party is bargaining under adverse conditions or in pressing want of pecuniary means is not unenforceable on account of duress if the other party is not responsible for those circumstances and did not create those necessities. Third, the pressure must have been wrongful. There must be some threat to do something harmful which the threatening party has no legal right to do. An act or threat may form the basis for a claim of coercion although the act or threat is not criminal or tortious or in violation of a contractual duty.

Facts:

Defendants Springfield Realty Corporation and Bernard Young, the corporation's owner and executive officer, sought to acquire land from the creditor (Cheshire Oil Company) to build a shopping center. The parties agreed that the consideration paid for Cheshire’s land would be a nominal $200 and that Springfield Realty would lease a site in the shopping plaza to Cheshire to build a gasoline service station. If Cheshire could not obtain the necessary permits for the construction and operation of the gasoline island, however, the purchase price of the land without the lease would be $ 5,000. Cheshire was unable to get approval to operate the service station, so it raised its price for the land and defendants executed the note in that amount. Cheshire then brought an action to recover damages resulting from the alleged default in the performance of the terms of the promissory note given by the defendants. The master rejected defendants' claim that they were coerced by economic factors to sign the note and the trial court awarded damages to the creditor. The defendants filed exceptions.

Issue:

Were the defendants coerced by economic factors to sign the note, thereby making the judgment in favor of the creditor an error?

Answer:

No.

Conclusion:

Overruling defendants' exceptions, the court held that evidence that defendants chose to proceed on the basis of an understanding that they knew, or should have known, was not binding, was sufficient to find that defendants assumed the risk that the creditor might unexpectedly raise the price of the land. The court found that the price ultimately demanded was commensurate with the price defendants had paid for other land involved in the project.