Canada Mortgage Professionals Practice Exam

A contract subject to duress is characterized by the fact that one party has entered into the agreement under threat or coercion. This means that the individual who is being coerced does not have the ability to agree freely or voluntarily, which fundamentally undermines the principles of contract law that require mutual consent and an equal bargaining power between parties.

When duress is present, it means that the terms of the contract may not reflect the true intentions or willingness of the coerced party. Instead, they are essentially forced into the contract against their will, which can make the contract voidable at their discretion. The emphasis on a threat or coercion as a defining element illustrates that true freedom to contract is absent in scenarios of duress.

In this context, the other choices reflect scenarios where the voluntary agreement and mutual understanding of terms are present, which is contrary to the nature of a contract under duress. Therefore, the emphasis on threat or coercion as a characteristic of duress captures the essence of how this legal concept operates within contract law.