The Impact Of The Third Party’s Coercion On The Validity Of The Contract

The importance of the principle of freedom of contract for the modern society goes without saying. According to this principle, the contract should go into effect with the parties’ manifestion of intention. However, the parties’ manifestion of intention could be impacted or changed when they are forced to conclude a contract by a third party, which means the parties’ manifestion of intention is not free. Obviously, the law cannot make this kind of contract fully legally effective. Instead, the law shall provide legal remedy. And more important is how to offer help to the coerced party without doing harm to the well-meaning counter-party and make it fair and efficient. The core of the problem is correct judge of the validity of the contract concluded with third party’s coercion. This paper is to solve this problem.In addition to the introduction, this paper includes the following four parts:Part I: Firstly, coercion is defined as the threat of harming others, making one party feel scared and agree to conclude a contract with others. Then argue the constituent elements of coercion including coercive acts 、illegality of coercion and the causal relationship between the contract. Then define the third party as who needs to take responsibility for the contract or the third party with consent of the counterpart to involved in making of the contract.In this way, third party’s coercion is clearly defined, laying the foundation of the further discuss- ion on the validity of the contract of third party’s coercion.Part II: This section is intended to explain that there is no provision in China’s current law system to judge the impact of third party’s coercion on the validity of the contract, making it a loophole of the law which needs to be supplemented; and because of the lack of legislation,judges go to different conclusions on whether a third party’s coercion would affect the validity of the contract and what impact on the validity of the contract.Part III: This part is to provide valid reference to improve the future legislation on the impact of third party’s coercion on the validity of contract via comparative analysis. After study, we find two legislation examples on this issue: one is third party’s coercion unconditionally influence the validity of the contract; the other one is third party’s coercion conditionally influence the validity of the contract and the impact is mainly to make the contracts revocable.Part IV: In this section, the author firstly argue that the legislative problem of the impact of the third party’s coercion on the validity of the contract is that it’s difficult to balance the interests of coerced party and well-meaning counter-party. The author suggests trust protection as a way to solve the problem. That is to say, the counter-party has good faith and concludes the contract because the counter-party believes the contract is valid. So the law should provide a positive trust protection for the well-meaning counter-party, which is to limit the right to revoke of the coerced parties. Finally, combined with the first three parts of the discussion, the author comes to the legislative suggestions on the problem of the impact of the third party’s coercion on the validity of the contracts: the coerced party can request the court or an arbitration institution to modify or revoke the contract when the counter-party knows or should know the existence of the coercion fact or the counter-party has not trust and follow the contract during the period when the contract is revocable.