Abuse of Power
Either party has the right to request a people's court or an arbitration institution to alter or rescind any of the following contracts:
1. any contract which is made under substantial misunderstanding; or
2. any contract the making of which lacks fairness.
Where a party makes the other party enter into a contract against its true will by means of deceit, coercion or taking advantage of its difficulties, the injured party has the right to request a people's court or an arbitration institution to alter or rescind the contract.
Where the request of the party is an alteration to the contract, the people's court or arbitration institution shall not rescind it.
Article 4.108 (ex art. 6.108) - Threats 236
A party may avoid a contract when it has been led to conclude it by the other party's imminent and serious threat of an act: 237
(a) which is wrongful in itself, or 238
(b) which it is wrongful to use as a means to obtain the conclusion of the contract , 239 unless in the circumstances the first party had a reasonable alternative. 240
§ 173 When Abuse of a Fiduciary Relation Makes a Contract Voidable
If a fiduciary makes a contract with his beneficiary relating to matters within the scope of the fiduciary relation, the contract is voidable by the beneficiary, unless
(a) it is on fair terms, and
(b) all parties beneficially interested manifest assent with full understanding of their legal rights and of all relevant facts that the fiduciary knows or should know.
Topic 2 - Duress and Undue Influence
§ 174 When Duress by Physical Compulsion Prevents Formation of a Contract
If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent.
§ 175 When Duress by Threat Makes a Contract Voidable
(1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim.
(2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction.
§ 176 When a Threat Is Improper
(1) A threat is improper if
(a) what is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property,
(b) what is threatened is a criminal prosecution,
(c) what is threatened is the use of civil process and the threat is made in bad faith, or
(d) the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient.
(2) A threat is improper if the resulting exchange is not on fair terms, and
(a) the threatened act would harm the recipient and would not significantly benefit the party making the threat,
(b) the effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or
(c) what is threatened is otherwise a use of power for illegitimate ends.
§ 177 When Undue Influence Makes a Contract Voidable
(1) Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.
(2) If a party's manifestation of assent is induced by undue influence by the other party, the contract is voidable by the victim.
(3) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the undue influence either gives value or relies materially on the transaction.
Article 179. Invalidity of Transaction Concluded Under Influence of Fraud, Coercion, Threat, or Ill- Intentioned Agreement of Representative of One Party with Other Party or Coincidence of Grave Circumstances
1. A transaction concluded under the influence of fraud, coercion, threat, or ill-intentioned agreement between a representative of one party with the other party, as well as a transaction which a person was forced to conclude as a consequence of the coincidence of grave circumstances on conditions extremely disadvantageous for himself which the other party took advantage of (transaction on crushing terms) may be deemed by a court to be invalid upon the suit of the victim.
2. If the transaction was deemed invalid on one of the grounds specified in point 1 of this Article, then the other party shall return to the victim everything received by it under the transaction, and if it is impossible to return that received in kind, the value thereof shall be compensated in money. Property received under a transaction by the victim from the other party, as well as that due to it in compensation for what was transferred to the other party, shall go to the revenue of the Russian Federation. If it is impossible to transfer the property to the revenue of the Russian Federation in kind, the value thereof in money shall be recovered. In addition, the other party shall compensate the victim for real damage caused to it.