Legal Definitions - economic coercion

Economic coercion refers to the use of significant financial or economic pressure to compel an individual, business, or government to act in a way they would not otherwise choose. This pressure often involves threatening severe economic harm, withholding essential resources, or exploiting a position of economic dominance to undermine free will and fair negotiation, rendering any resulting consent involuntary.

Here are some examples to illustrate economic coercion:

• Example 1: Business-to-Business Pressure

  A dominant online marketplace informs a small, independent software developer that if they do not agree to an exclusive, highly unfavorable revenue-sharing agreement, the marketplace will remove all of the developer's applications from its platform, effectively cutting off their primary source of income and market access. The developer, having invested years in building their presence on that platform, feels they have no real choice but to accept the terms.

  This illustrates economic coercion because the marketplace is leveraging its control over the developer's access to customers and revenue to force an agreement that is not freely chosen, threatening significant financial harm if the developer refuses.

• Example 2: International Relations

  Country X, a major global supplier of a critical raw material, announces it will halt all exports of this material to Country Y unless Country Y votes a specific way on a resolution at the United Nations. Country Y's industries are heavily reliant on this raw material, and a sudden halt would cause widespread economic disruption and job losses.

  Here, Country X is using its economic power as a supplier of an essential resource to exert political pressure on Country Y, threatening severe economic consequences to force a specific action, which constitutes economic coercion.

• Example 3: Employment Context

  An employer tells an employee who is facing a severe family medical emergency that their request for unpaid leave will only be approved if they agree to immediately sign a new contract that waives their right to future severance pay, knowing the employee desperately needs the leave and cannot afford to lose their job.

  This is an example of economic coercion because the employer is exploiting the employee's vulnerable financial and personal situation, using the threat of denying essential leave (and potentially job loss) to force them into an agreement they would not otherwise accept under normal circumstances.