What is duress in law of contracts?

There is a lot of case law surrounding what amounts to duress, but the short summary is "illegitimate pressure". What constitutes illegitimate is complex (and varies between jurisdictions).

Normal physical pressure is straightforward ("sign this or I'll beat you up"), whether it is directly or obliquely stated, and whether directed at the contracting party or another ("I'd hate to think what would happen to your son if you don't sign"). Again, the test varies, but the common law rule is that the pressure must be such as to make a person of reasonable firmness yield. Hollow, baseless or transparent threats are not suffient. Similarly it is not a question of the words used, but the context. The same words said by a young girl will not have the same effect as those said by a large man leaning over you holding a club.

More complex concerns relate to 'economic pressure' ("if you don't sign an exclusive agreement, we will stop supplying you at all"). This is invariably more difficult, because businesses are expected to use commercial leverage against each other, and a degree of rough and tumble is anticipated. However, threats to do (or not do) something which would amount to a crime, or would otherwise be unconscionable will usually amount to sufficient duress to avoid a contract (many examples from the cases relate to unions threatening illegal strike action).