Contract Interpretation: Modification of Contract Terms

Question 1

What is the rule re: modification of K and consideration (non-UCC)?

Answer 1

Traditional view –> K cannot be modified without consideration

Modern view –> Modification is permitted without consideration if:

1. the modification is due to circumstances that were unanticipated when K was made; AND
2. it is fair and equitable

Question 2

Under the UCC, What is the rule re: modification of K and consideration?

Answer 2

good faith promises of new and different terms by parties to a sales contract are valid WITHOUT consideration

Question 3

Can a written contract be modified orally?

Answer 3

YES.

HOWEVER –> it will fall into the SOF IF the contract AS MODIFIED would fall into SOF

EXAMPLE –> for SOG contract, if contract AS MODIFIED is for goods of $500 or more, then it must be evidenced by writing. If not, then it doesn’t.

Question 4

What is the common law rule re: prohibitions of oral modifications?

Answer 4

The common law rule is even if a written K says it cannot be modified orally, it still can be

Question 5

What is the UCC rule re: prohibitions of oral modifications?

Answer 5

Under UCC –> if K provides that it cannot be modified or rescinded except by signed writing, that provision is given effect

HOWEVER –> if K is between a merchant and non-merchant , this provision requires non-merchants separate signature

Question 6

What is the rule re: modifications and the parol evidence rule?

Answer 6

Parol evidence IS admissible to show subsequent oral modification of a written contract (ie.. parol evidence rule does not apply)

Question 7

What is the rule re: attempts at oral modification and waiver?

Answer 7

If parties attempt to orally modify a K that requires written modification (either bc of SOF or contract clause), the modification is NOT effective.

HOWEVER –> it can operate as a waiver IF the other party has changed position in reliance on the attempt