Preexisting Duty Rule

Question 1

What is the preexisting duty rule?

Answer 1

• Common law rule in which a promise to increase compensation for duties already owed is unenforceable because there is no consideration for the modification.
  o EXAMPLE: The captain of a fishing vessel promised to pay $100 to each of the sailors for their work on a fishing voyage. Midway through the voyage, the sailors threatened to cease work unless they were promised an additional $50 each, and the captain reluctantly agreed. At the end of the voyage, the captain paid each of them the originally promised $100 but refused to pay the $50 increase, so the sailors sued to recover the additional amount. Because the sailors were already obliged to perform the work in question under the terms of their original contract with the captain, his promise of an additional $50 is unenforceable under the pre-existing duty rule.

Question 2

What are some exceptions to the preexisting duty rule?

Answer 2

• Mutual modification
• Unforeseen circumstances

Question 3

When is mutual modification allowed?

Answer 3

• Mutual Modification of an existing K is enforceable if both parties agree to different performance from what was originally required by the original K.
  o EXAMPLE: During the course of the fishing voyage, the ship’s cook takes ill, and the captain instructs the youngest of the sailors to perform the cook’s duties in addition to his fishing duties. The sailor refuses to perform the work unless the captain promises him an additional $50 in compensation, and the captain reluctantly agrees. The promise of additional compensation is enforceable as a “mutual modification” of the original contract.

Question 4

When would unforeseen circumstances justify increased compensation?

Answer 4

• Preexisting duty rule not applicable if increased compensation is given in exchange for a promised performance that has been rendered substantially more burdensome than reasonably anticipated when K formed.
  o EXAMPLE: The fishing nets provided by the captain turn out to be defective and thus increase the workload of the sailors in a manner substantially in excess of what was reasonably contemplated under the original contract. The sailors threaten to cease the fishing unless they are promised an additional $50 each, and the captain reluctantly agrees. The promise is enforceable despite the pre-existing duty rule in view of circumstances not reasonably anticipated by the parties at the time of contracting.

Question 5

Does the UCC follow its own preexisting duty rule?

Answer 5

• No. Agreement modifying an existing K needs no consideration to be enforceable as long as made in good faith.
  o EXAMPLE: A manufactures upsidasium bearings and has a three-year contract to supply B with the bearings the latter uses to make turbo-jet engines for commercial aircraft. Because of an unexpected world shortage of upsidasium, the price of the metal A uses to manufacture the bearings triples over a short period, and A advises B that it can’t continue supplying the bearings unless B agrees to increase the price to the point that A will break even on the supply contract. B reluctantly agrees. Is the modification enforceable?