MODIFICATIONS

Question 1

Modifications under common law

Answer 1

Preexisting Duty Rule will generally govern (i.e. no modification without mutual consideration)

Generally: modifications are okay without consideration. They must be voluntary and in good faith

a) Also requires new, unanticipated circumstances to change the context of the contract
b) Unanticipated and unallocated risk/circumstances arise—modification as long as its good faith and agreed to

Question 2

Mutual modification

Answer 2

a promise to increase compensation under existing contract is enforceable as a mutual modification if:

(i) Both parties agree to a performance that is different from the one required by original contract
(ii) The difference in performance is not a mere pretense of a newly formed bargain
b) Unforeseen Circumstances
(i) When performance promised under original agreement is rendered more burdensome than reasonably anticipated by some unforeseen circumstance
c) No “hold up” game is going on –i.e. a party is holding up their end of the contract in order to get more payment and the other party is put in a position such that they have to pay in order to get performance

Question 3

R2C §89

Answer 3

No additional consideration requirement for modifications. Modification is binding if:

a) Modification is fair and equitable in view of circumstances not anticipated by the parties when contract was made; or
b) To the extent provided by state; or
c) To the extent that justice requires enforcement in view of material change of position in reliance on the promise

Question 4

Angel v. Murray

Answer 4

Garbage collector for town asks for more money when town grows significantly at unexpected rate. Payment modification was legal. Judgement for D.

a) Three part test
(i) Promise modifying contract was made before full performance on either side
(ii) Underlying circumstances that led to modification were unanticipated (was risk allocated?)

(iii) Modification is fair/equitable

Question 5

UCC §2-209

Answer 5

1) No preexisting duty rule—modifications don’t need to be supported by additional consideration. Modifications must meet good faith test.

Question 6

R2C § 278

Answer 6

(Substitute performance)

If obligee accepts in satisfaction of obligor’s duty a performance offered by obligor that differs from what is due, the duty is discharged