Bar Exam — MBE (Multistate Bar Exam)ContractsMedium
A homeowner contracted with a builder for the construction of a custom deck for $10,000. The contract specified that the deck was to be made of Brazilian walnut, a premium hardwood. Before construction began, the price of Brazilian walnut unexpectedly tripled due to new import tariffs. The builder informed the homeowner that he could not complete the project for the agreed-upon price and requested an additional $5,000 to cover the increased material costs. The homeowner, eager to have the deck built, orally agreed to pay the extra amount. After the deck was completed using Brazilian walnut, the homeowner refused to pay the additional $5,000, asserting that the original contract price was binding. Is the homeowner legally obligated to pay the additional $5,000?
- ANo, because modifications to construction contracts must always be in writing.
- BYes, because the homeowner orally agreed to the modification, making it enforceable.
- CYes, because the unexpected increase in material costs constitutes an unforeseen circumstance.
- DNo, because the modification lacked new consideration from the builder.
Show answer & explanationAnswer & explanation
Correct answer: D. No, because the modification lacked new consideration from the builder.
Under the pre-existing duty rule, a promise to perform an existing legal duty is not valid consideration for a new promise. Here, the builder was already contractually obligated to build the deck for $10,000. His promise to perform that same duty, even with increased costs, does not support the homeowner's promise to pay an additional $5,000.
Why the other options are wrong
- A. Generally, modifications to contracts for services (like construction) do not require a writing unless the original contract was required to be in writing under the Statute of Frauds and the modification changes a material term.
- B. Oral agreements can modify contracts, but they still require consideration.
- C. While unforeseen circumstances can sometimes justify modification, it typically requires a mutual agreement supported by new consideration or a valid exception to the pre-existing duty rule, which isn't present here.
Pre-existing Duty Rule
A promise to perform a duty that one is already legally obligated to perform is not considered valid consideration for a new promise.
- Applies to common law contracts (services, real estate).
- Without new consideration, a modification is unenforceable.
- Exceptions exist, such as unforeseen circumstances or mutual modification.
Memory trick: Modifying a deal? Check the 'C' for Consideration!