Two parties, a contractor and an owner, enter into a contract for the renovation of a house. A week later, the contractor is not satisfied with the amount he is paid. He tells the owner that he will leave the yard when he is no longer paid for his services. Faced with the prospect of not having completed the desired work, the owner agrees. Under the pre-existing rule, the owner`s promise to pay the new amount is unenforceable because the contractor already had a pre-existing obligation to perform the requested work at the original price. No exchange has been negotiated for this change, so the owner no longer has to pay. Under the Uniform Commercial Code, amendments may also be made without regard to the common law legal rule, provided that the amendment is made in good faith. See UCC § 2-209. [22] [23] However, the Fraud Act must be respected. Therefore, a written contract is required if the amended contract falls within the scope of this Act.
For the purposes of the UDC, a contract must be concluded in writing if it concerns the sale of goods priced at more than US$500. UCC § 2-201. [24] The party seeking payment already has a public obligation to perform the act. For example, an expert in polygraphy for government employees could question a criminal about an unrelated crime while managing a polygraph. If the criminal admits to the crime and the employee then demands a reward for identifying the offender, he would not be entitled to it under the rule of legal duty, since he already has a public duty to inquire about the crimes. [20] There are ways to circumvent the legal obligation, such as mutual termination of the existing contract with a clear indication of such termination (literal tearing of the old contract). In some States, the parties may also renegotiate contracts to include additional benefits, for example, if the party fulfils unexpected or additional obligations, if the parties agree in good faith or if a new contract is agreed. A provision in contract law that provides that a party who does or promises to do only what he was already required to do under the law or contract cannot constitute consideration for the conclusion of a new binding contract or the amendment of an existing contract. Similarly, a party that fails or promises to refrain from doing what it is already required to do under the law or contract is not sufficient consideration to support a new contract or an amendment to an existing contract. Although the already existing customs rule applies today, these and other concerns have led to several exceptions to the rule. The pre-existing rule of obligations is an aspect of contractual consideration.
The concept of consideration, which originated in England (the global embodiment of the common law), has been adopted by other jurisdictions, including the United States. That rule states, in essence, that performance of a pre-existing obligation is not good consideration for supporting a valid contract; But there are exceptions to the rule. [1] The pre-existing mandatory rule is a common law contractual rule. It clarifies that the rule that taking an action to which a party is already contractually bound does not constitute valid consideration for a new promise. In other words, an offer by a party for a service that is already required under an existing contract is insufficient consideration for amending the contract. In practice, the already existing customs rule also preserves the integrity of a treaty by preventing the parties from forcing the other parties to modify the contract. [2] For example, under the „pre-existing customs rule“, an agreement to do what one is already obliged to do cannot serve as „sufficient consideration in support of an addendum or amendment“. This rule usually comes into play when a party is not satisfied with the agreed contract and wishes to amend it. He must offer the other party a new consideration in order to get that other party to accept the amendment.
Therefore, the mere offer of the pre-existing obligation which it was already required to perform cannot serve as consideration for the amendment. The already existing customs rule plays a role in rescue, which is a „successful voluntary service to save maritime goods in danger at sea“. [27] The service must be „voluntary“, which in this context means that the salvage must have no existing obligation to the vessel. In general, the crew of a ship is only eligible for rescue if (i) they have been ordered to abandon ship (so that their employment contract is terminated), Le San Demetrio (1941); [28] or (ii) the crew goes beyond their normal duty to ensure the safety of The Beaver (1800). [29] The Single Commercial Code, which applies to contracts for the sale of goods, also substantially modifies the existing customs rule. The UCC modifies the rule because it wants to „ensure that Contracting Parties can adapt freely to changing circumstances“. Article 2-209(1) of the UCC provides that: At the end of the lesson, the student will be able to: 1. Explain how the pre-existing custom rule applies to the changes. 2. Determine whether the amendment of a contract is enforceable under the modern common law rule. 3.
Determine whether the modification of a treaty is enforceable under the UDC rule. 4. Distinguish between modification and compliance and satisfaction. 5. Distinguish between a performance contract and a superseded contract. 6. Distinguish between liquidated and unliquidated debt. 7. Apply the elements of Article 3-311 of the UCC to a factual situation involving payment by cheque to determine whether agreement and satisfaction have been reached. As early as 1938, a judge called the already existing customs rule „one of the relics of an old law that should have been rejected long ago.“ [7] Despite its shortcomings, the existing customs rule preserves the integrity of the Treaty and can effectively regulate treaty changes and prevent abusive practices during renegotiations. To ensure that it remains useful, the courts will continue to create exceptions and limit their application. [8] Some critics argue that the rule may be overbroad because it makes contracts rigid and impedes meaningful change.
Suppose a plumber agrees to replace all the plumbing in a house with copper pipes, but before the project begins, the price of copper skyrockets and it is no longer financially possible for the plumber to replace the pipe.
