Modification: common law vs. UCC
Performance & Breach · Mar 17
Floor. ~40 min: R2d § 89 + Alaska Packers. The doctrine the next class assumes you have covered.
Target. ~75 min: Floor + Angel + UCC § 2-209 + synthesis.
A promise modifying a duty under a contract not fully performed on either side is binding
(a) if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
(b) to the extent provided by statute; or
(c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.
(1) An agreement modifying a contract within this Article needs no consideration to be binding.
(2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except as between merchants such a requirement on a form supplied by the merchant must be separately signed by the other party.
(3) The requirements of the statute of frauds section of this Article (Section 2-201) must be satisfied if the contract as modified is within its provisions.
(4) Although an attempt at modification or rescission does not satisfy the requirements of subsection (2) or (3) it can operate as a waiver.
(5) A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.
117 F. 99 (9th Cir. 1902)
United States Court of Appeals for the Ninth Circuit
Rule. A modification of an existing contract demanding additional compensation for the same performance is unenforceable for lack of consideration (pre-existing duty rule) and, where coerced by the obligor's leverage over a counterparty with no realistic alternative, is also voidable as the product of duress.
113 R.I. 482, 322 A.2d 630 (1974)
Supreme Court of Rhode Island
Rule. A modification of an executory contract is enforceable without new consideration where (1) the modification was made before performance was complete on either side, (2) the parties voluntarily agreed, (3) the modification is fair and equitable in view of unanticipated circumstances, and (4) it does not run against statute or public policy. (Restatement (Second) § 89.)
Problem 23.1. Angel v. Murray dismisses the pre-existing duty rule and replaces it with the ability to modify a contract on fair and equitable terms in light of unanticipated circumstances. R2d § 89 codifies the same move.
Question. Does this case move the law in the right direction or the wrong one? Argue both sides.
Same Alaska Packers facts, but this time the contract is for the sale of canned salmon, not the labor of fishermen. Mid-season the fishermen-suppliers demand a price increase for the cans they have already promised to deliver. The cannery agrees in writing, then refuses to pay the increase.
Does the cannery owe the increase under UCC § 2-209? Does Alaska Packers come out differently when the goods/services line flips?
Birdsall held that parties generally intend an accord and satisfaction (not a substituted contract) when one party agrees to take less than the original contract owed.
Question. Do you agree with that presumption, or is it misplaced? Distinguish substituted contract from accord and satisfaction in form and function. Then defend (or attack) the presumption.
Rules. R2d § 89, UCC § 2-209.
Cases. Alaska Packers' Association v. Domenico · Angel v. Murray.
Open question. Modification doctrine polices renegotiation between the original parties. But what happens when a contract right is handed off to a stranger to the bargain, assigned or delegated to someone the other side never chose? The Module VI capstone returns to this seam, and Module VIII (third-party rights) takes it up in full.
Next class: Module VI Capstone: Performance & Breach
_Performance & Breach_ · Mar 18
Module quiz, debrief, and Adequate Assurance Letter drafting. Bring the conditions taxonomy, the substantial-performance test, the repudiation/assurance flowchart, and the excuse doctrines. One question across the module: when performance fails, what does the law ask first: was there a duty, was it discharged, or was it breached? Come ready to answer. You may be called.