As a legal concept, duress has a long tradition. Duress is related to the concept of undue influence. Duress exists when there is a threat of bodily harm, and the threat is immediate and cannot be avoided. Duress also exists in criminal law proceedings. In order for duress to exists in a contract law court proceeding there must be a wrongful or illegal threatened act. 

A contract also cannot normally be made voidable because one of the parties is suffering from economic duress. Claims of duress are filed by parties to a contract seeking to prove that their assent to a contract was not genuine, and thus did not fulfill the essential requirements needed to form a contract.

A contract cannot be invalidated by a party to that contract who claims duress because the other party threatened to sue them for a larger amount, because the filing of a law suit is a legally permitted action. A claim of duress is distinct from instances where the consideration offered by one of the parties is the forbearance of an action. 

Duress can be invoked if the party claiming they were acting under duress was in fear for their safety. An example of duress would be if a person is told to sign a contract or their family or they themselves would be harmed. This qualifies as duress because the consideration of forbearance is to forbear from doing an illegal act. If it is a wrongful or illegal threatened act then it constitutes an instance of duress.

A claim of economic duress is not usually permitted. Individuals are usually only able to successfully invoke a claim of economic duress if the other party in the contract is the immediate cause of the economic duress. Sometimes the courts permit a claim of economic duress to be filed in contracts which involve one party claims they are suffering from economic difficulties which are not caused by the other party in the contract, although such claims of economic duress are not usually accepted. 

Economic duress does not exist simply if exorbitant prices are charged for goods or a service. However, if the high prices are charged by the same party that created the need for the good or service then a claim of economic duress may be permitted by the courts.

If the individual claiming the contract was formed under duress is able to prove their claim, then the courts may declare the contract voidable. 

A contract may be ruled to be illegal by any court of law. Illegality can become an issue even if the normal requirements of acceptance of offers, consideration, contractual capacity, are present. Illegal contracts typically do not result in any liability for the involved parties. The courts may rule an illegal contract exists regardless of whether or not the parties involved in the suit raise the issue, even if the two parties believe the contract to be legal.

A severable or divisible contract may be formed by the parties to the contract or may result from actions of the courts. The parties can create a severable contract by including a severence clause into the original contract. A severance clause is a clause which states that if there is one other contractual clause that would cause the contract to be considered illegal, then the offending phrase should be stricken from the contract, so long as the removal of the clause does not substantially alter the original nature of the contract. 

Divisible contracts are similar contracts entered into by the same parties which have similar terms but can be completed independently of each other. A court may form a severable contract by utilizing a blue pencil test. If the offending phrase in a contract can be removed from the contract without enacting any change besides turning an illegal contract into a legal one, then the change passes the blue pencil test.

An unconscionable contract is unenforceable. It is immaterial whether a waiver is explicit or implicit. Procedural unconscionability also gives rise to an unconscionable contract if one of the parties is in a vastly superior bargaining position.

An unconscionable contract may also contain substantive unconscionability if the terms of the contract are excessively harsh or would be oppressive to implement. An unconscionable contract can also result if the party selling the goods marks up the price tremendously and attempts to hide how great the mark up is.

Whether a contract is conscionable or unconscionable can only be determined by a judge and never by a jury.

Contract laws generally prohibit contracts that restrain trade. Contracts restraining trade are defined as contracts that reduce the level of competition involved in the commercial exchange of goods or services. Contracts that restrain trade are considered a classification of contracts that are contrary to public policy.

These kinds of contracts are sometimes defined by contract laws as covenants not to compete and sometimes as non-competition contracts. Whichever they are known as, though, they are illegal and are thus considered unenforceable. 

Elements of contracts that restrain trade are generally permissible if they are limited in scope or duration. A contract is permissible if it compels a party to the contract to relinquish the right to make a particular thing, but not if it attempts to force one of the parties to the contract to not compete with the other in any way in the future.

Contracts are permitted to contain non-competition clauses if the clause exists in order to protect business secrets of the employer, or if the non-competition element of the contract seeks to limit a former employee from utilizing business contacts which are considered essential to the operations of the company with which the original contract was signed.

Fraudulent misrepresentation may be claimed by a party attempting to have a contract declared void if three different criteria are met. The first is that there is an occurrence intended to create justifiable reliance on a fraudulent misrepresentation. 

The party seeking to have a contract invalidated must show that they entered into the contract due to a justifiable reliance on the other party’s fraudulent misrepresentation. Justifiable reliance only becomes an issue if the claim is not readily apparent to be false. Failure to investigate a claim may be used to support a claim of justifiable reliance. The material misrepresentation must be made about an area that the injured party had no way of proving and thus was forced to rely on the other party’s statement.

During the contract drafting process every attention must be paid to ensuring that an illegal contract is not created. As a result, individuals responsible for contract drafting employ several safeguards to attempt to decrease the probability that they create an illegal contract.

Some of these preventative methods include using boilerplate language, which are terms used in a majority of contract drafting negotiations, as well as employing lawyers or people with a legal background in the contract drafting. However, even when these safeguards are employed, illegal contracts can still result.

Even if illegality is found to exist in a contract, it may still be enforceable in pari delicto, then a legal contract will not be ruled to exist.

If the violation of the law in question is not of a serious nature, then the illegal contract may be enforced as if it were a legal contract. If the compensation that would have to be provided in the event the contract was declared illegal would be out of proportion to the infraction of the concerned law, then the contract may be enforced as if it were a legal contract. The agreement may also be treated as a legal contract if the court determines that there would be an unjust enrichment to one of the parties in the event that the contract drafting was set aside.

If a contract is ruled to be illegal after actions have been done by one of the parties which cost money, the idea of quantum meruit may come into play. Under quantum meruit, which means “as much as deserved,” an individual may be able to recoup expenses in proportion to their outlay of money for services performed in an illegal contract if they performed the actions under the belief they were executing a legal contract.

Unlike in a legal contract, quantum meruit does not entitle the individual invoking it to hold the other person liable for the terms of the contract. This legal concept only allows the individual to recoup their losses.

Fraud is voidable by the injured party. The justifiable reliance cannot be easily disproven and must constitute a claim that a reasonable person would believe. A promisee who entered into a contract with a car salesman that claimed that the car in the contract could go one hundred miles per gallon would not be able to claim justifiable reliance on the salesman’s claim because the claim is unjustifiable. 

The claim that a car is brand new, despite extensive and obvious damage to the car, would not be grounds for justifiable reliance by an individual claiming the salesman duped them. Justifiable reliance only applies to instances where the injured party relied upon a claim that could not be easily disproved.

A person could claim justifiable reliance if they bought a car they believed was in perfect working order but upon driving the car home discovered extensive body damage, a faulty ignition system, failing brakes, or other serious defects in the car. In such a situation, the person may be able to claim that they were damaged by a justifiable reliance on the salesman’s claims.

The party claiming that they were induced to enter into a contract due to justifiable reliance on misrepresentations by the other party must be able to show that their reliance was not based on something that they could reasonably be expected to discover on their own.