A homeowner hired a contractor to remodel her bathroom for $10,000. Before the work began, the homeowner decided she wanted higher-end fixtures and a custom-built vanity, which would increase the cost by an additional $3,000. The contractor agreed to the changes and the increased price. However, after the bathroom was completed, the homeowner refused to pay the extra $3,000, arguing that there was no new consideration for the modification. Is the homeowner correct in asserting that the modification is unenforceable due to a lack of consideration?
- AYes, because under the pre-existing duty rule, the contractor was already obligated to complete the bathroom for $10,000.
- BNo, because the contractor substantially performed the original contract, making the modification enforceable.
- CNo, because the modification involved new duties for the contractor, which constitutes valid consideration.
- DYes, unless the modification was made in writing and signed by both parties.
Show answer & explanationAnswer & explanation
Correct answer: C. No, because the modification involved new duties for the contractor, which constitutes valid consideration.
The pre-existing duty rule states that performing a duty you are already contractually obligated to perform does not constitute new consideration for a contract modification. However, if the modification involves new or different duties, even minor ones, those new duties can serve as valid consideration. Here, the contractor took on new duties (installing higher-end fixtures and a custom vanity) in exchange for the increased price, thus providing new consideration.
Why the other options are wrong
- A. This is incorrect. The pre-existing duty rule applies when there are no new duties. Here, new duties were added.
- B. Substantial performance relates to breach, not the enforceability of a modification due to consideration.
- D. While written modifications are often good practice, a written agreement is not strictly required to overcome the pre-existing duty rule if new consideration is present.
Pre-existing Duty Rule (Common Law exceptions)
Under common law, a promise to perform a pre-existing legal duty is not valid consideration for a new promise. However, exceptions exist, such as when new or different duties are undertaken or when there are unforeseen difficulties.
- Applies to common law contracts, not UCC.
- Performance of existing duty is not new consideration.
- Exceptions: new/different duties, unforeseen difficulties, rescission followed by new contract.
Memory trick: Modify a contract, but make sure you're getting something NEW in return!