DEFINITION of Duress
Duress describes the act of using force, false imprisonment, coercion, threats or psychological pressure to compel someone to act contrary to his or her wishes or interests. Duress is also used as a form of defense to a crime by a defendant who is compelled or coerced to commit the crime because they are under serious imminent harm to themselves or others.
BREAKING DOWN Duress
If duress is used to make a person commit a crime or do something against their will, the defendant in a criminal prosecution may raise the defense that others used duress to force him or her to take part in the crime.
Duress occurs when a person is prevented from acting (or not acting) according to free will. Forms of duress could fall under threatened physical harm or economic duress.
Example of Duress
For example, if Bob makes unlawful threats or engages in a coercive behavior that causes his Aunt Sally to sign an agreement or execute a will against her will, then Bob is causing Aunt Sally to be "under duress."
Financial duress describes an environment when business managers make difficult decisions under stress. These suboptimal choices are often made outside of standard operating and financial conditions. For example, to keep a business afloat, a manager may sell an asset knowing it will disrupt business in another way. In a sense, financial duress puts a business between a rock and a hard place — where no good solution exists. When a business begins to experience financial duress, things have a way of cascading negatively. Small disruptions begin to compound, leaving managers little choice but to make a series of often weak decisions.
Financial duress can be brought on in a couple of ways. First, they can be internal in nature, such as when a business borrows more than is prudent or engages in questionable merger activity. These self-inflicted wounds can permanently damage a business. Other times, duress can come about because of external forces, such as the impact on a business from a widescale economic recession.