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 Shabbat Parashat Noach | 5766P’ninat MishpatClaim That an Out-Of-Court Settlement Was Done Under Duress - Based on Piskei Din Rabbaniim- vol. IV, pp. 282-288
Case: The plaintiff (=pl) and the defendant (=def)jointly owned a store. After quarrels erupted, they signed an agreement to end the partnership and settle claims, with def paying pl 20,000 lira, for which a bank guaranteed note was given. Pl has new claims and says that he signed the agreement under duress, as he feared difficulty in receiving the proper amount of money for his share or that he would receive payment after the funds would lose much of their value.
Ruling: The Shulchan Aruch (CM 205: 1,2) rules that in order to void a sale based on the claim that it was done under duress, one must have made a moda’ah (announcement of intention) prior to the sale in front of two witnesses and prove that there was duress. In regard to a present or the unilateral relinquishing of rights, a moda’ah is sufficient without proof of duress. The Netivot Hamishpat (ad loc.) states that regarding a present, proof of duress is also sufficient without a moda’ah.
The Shulchan Aruch (ibid.:3) says that a p’shara (financial compromise) is like a sale in this regard. However, this seems to contradict the Shulchan Aruch CM 12:11. There he writes that if one was intimidated into a p’shara, he can back out even if moda’ot were nullified, indicating that p’shara is treated like a present. A few distinctions are given to remove the contradiction: 1) The former source indicates only that proof of the duress is needed, not that p’shara requires a moda’ah. 2) When the outcome of a possible din Torah is not clear, the p’shara is like a sale because one gains something positive from his agreement. The latter source refers to a case where he would have certainly won, and therefore he can freely back out of the p’shara. 3) The latter source, which says that one can back out, refers to a case where the money to be received from the p’shara did not yet arrive.
In our case, pl admits that his legal prospects were not assured. Furthermore, he received his part of the money more quickly than through a normal breakup of a partnership. This is because we would have to determine how quickly it is equitable to expect the remaining partner to liquidate assets that were invested for the long term (see Aruch Hashulchan, CM 176:46). Pl thus gained from the p’shara, and he should need a moda’ah to back out. Even according to the first answer above, that it is sufficient to prove duress in order to back out, pl has not done so sufficiently. Pl claims that the p’shara should be reversible, because on part of the sum, he received only a promissory note, rather than cash. However, since it is standard business practice to view a bank guaranteed note as the equivalent of payment, this is not an issue, and certainly when part of the money was already paid.
Thus, since pl benefited from the p’shara, he cannot back out of it unless he made a moda’ah and can prove sufficient duress.
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