What will Johnson need to show in order to prove his cause of action?
Ronald D. Johnson is a former employee of International Business Machines Corporation (IBM). As part of a downsizing effort, IBM discharged Johnson. In exchange for an enhanced severance package, Johnson signed a written release and covenant not to sue IBM. IBM’s downsizing plan provided that surplus personnel were eligible to receive benefits, including outplacement assistance, career counseling, job retraining, and an enhanced separation allowance. These employees were eligible, at IBM’s discretion, to receive a separation allowance of two weeks’ pay. However, employees who signed a release could be eligible for an enhanced severance allowance equal to one week’s pay for each six months of accumulated service with a maximum of twenty-six weeks’ pay. Surplus employees could also apply for alternate, generally lower-paying, manufacturing positions. Johnson opted for the release and received the maximum twenty-six weeks’ pay. He then alleged, among other claims, that IBM subjected him to economic duress when he signed the release and covenant-not-to-sue, and he sought to rescind both. What will Johnson need to show in order to prove his cause of action?
Economic Duress in contracts refers tothe provision ofwarnings to cancel the contract if the other party does not agree to the new terms of the contract. Thisusually happens when a party has indulged itself in a wrongful act that is not prescribed in the contract and threatens to withhold payment of the other party unless they agree.
Here, Individual J needs to prove to the court thattheyweremade to sign the contract out of force and not by will. Corporation I was engaged in some unlawful acts, which were not mentioned in the contract, and forcefully made Individual J sign the contract.
For Individual J to claim economic duress upon Corporation I, the followingthings are needed to be provided:
Company I was engaged in some acts that were not mentioned in the contract and were of wrongful nature.
Individual J was vulnerableto sign the contract as Individual J was left with no alternative but to sign the contract.
The contract had something of value to Individual J, which was at stake if the contract was not agreed upon