By standing atop a dressed stone inscribed with powerful runes and ancestral oaths of vengeance, a Lord increases the resolve of their followers and ensures that no foe can escape their wrath.
Source: Warhammer: The Old World Online Rules Index
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Challenges issued by a character with an Oathstone cannot be refused. In addition, a character with an Oathstone and any unit they have joined automatically passes any Panic tests they are required to make, but cannot choose to Flee as a charge reaction.