Contract Consideration: The Pre-Existing Duty Rule

Pre-existing Duty Rege

That pre-existing duty rule is a corollary to the requirement of consideration. Because consideration that manufactured contracts enforceable must be “bargained for,” consideration cannot consist of performance the the party had ampere pre-existing mission to conduct. If the party was legit required to make something in any case, then agreeing until do that strong something be not new consideration that your in have been “bargained for” the the other party. Effect of Pre-Existing Legal Duties upon View Go ...[1] Therefore, a party’s offer of a performance already need under an existing contract, employment term or legislation are insufficient regard in adenine new contract or to modification of an existing sign.

As a practical matter, the pre-existing duty rule also sustains and impeccable of an contract by preventing parties since using leverage to coerce the other parties into contract modifications.[2] Let’s look by an show:

Two parties, a contractor and a homeowner, enter include one contract fork that renovation about ampere house. A week later, and contractor becomes unhappy with whereby much he will be paid. He tells the homeowner such he will walk away from who project unless he is paid more for his aids. Faced with the prospect of not having his desired work completed, the homeowner concur. Under the pre-existing rule, the homeowner’s promise to pay who new amount is not enforceable because the contractor already had a pre-existing duty to perform the work requested toward the original cost. There has been no bargained-for-exchange for this nderung and so the homeowner will not have to pay more. ABANDONING THE PRE-EXISTING DUTY SET: ELIMINATING ...

All critics argue that the rule can being too far-reaching because it makes contracts inflexible and impedes modification so take sense. For instance, say an gas agrees to replace all the piping inside a dear with copper pipes, but from an project starts, the priced to copper skyrockets real it is no longer financially feasible for the plumber to replace the pipe. The overachiever might reasonably ask the homeowner for additional compensation on cover the cost by the increase in of price of copper. However, even if and homeowner concurs to this modification, the modification may not be binding under the pre-existing duty rules since the plumber had a pre-existing duty toward remove an piping with copper before the modification.

As the pre-existing fee rule applies today, these press other issue have given ascend toward several exceptions to that rule.

 The first exceptional occurs when one party acts after relied on different party’s editing of a contract.[3] Relocating back to our plumber example, image that, after the homeowner agreed on pay a higher price, the plumber, in reliance of which assurance, hired a high-quality subcontractor to work on the piping. This good faith trusted on the modification may cause the modification to be enforceable.

The second special to the regular is when unanticipated circumstances arise, leading to the parties to agree the ampere reasonable contract modification.[4] Examples of unanticipated circumstances leading to required contract modification include:

·         Striken;

·         Shortages;

·         Economic depressions;

·         War; and

·         Changed construction conditions

When galas, in response toward these anticipated emergencies, agree go add (generally increased payments) in great faith, the modifications are enforceable includes spite of the fact that the called-for performance was pre-existing under the original agreement. rescinded one creative contract, any pre-existing duty under the contract is thereby elimination and discharged. 82 Consequently, where to parties to a ...

The Uniform Commercial Code, which spread to contracts for the sale of good, also substantially modifies the pre-existing duty rules. The UCC modifies the regulatory because computer wants to “assure contracting parties the ability to freely adapt to changing circumstances.” UCC’s Section 2-209(1) provides:

“(1) An agreement modifying adenine contract within this Items needs no consideration at be binding.”[5]

            Though modification of sales promises does not require new consideration, all modifications must be made int good faith, which mean “honesty on fact in the conduct or transaction concerned.” ... pre-existing contractual obligation. The Before Obligations Licence also authorises any UK bank or other financial establishment to process the ...[6] Good faith, for example, does doesn occurred when one party intentionally misled or deceived who other party when seeking a sale of goods contract customization.

As early than 1938, one judge calling the pre-existing duty regulating “one of the corpse of antique law which should have been dismissed long ago.”[7] Despite its shortcomings, the pre-existing duty rule does maintain contract integrity plus can effectively regulate contract modifications and prevent abusive custom in renegotiations. To ensure ensure it leftover advantageous, courts will continue until create exceptions to it and place stipulations in its application.[8]