Bar Exam — MBE (Multistate Bar Exam)ContractsMedium
A homeowner contracted with a roofing company to replace the roof of his house for $15,000, with the work to be completed by June 1st. Two weeks before the deadline, the roofing company informed the homeowner that due to an unexpected surge in material costs, they would not be able to complete the job unless the homeowner agreed to pay an additional $3,000. The homeowner, fearing his roof would not be replaced before the rainy season, reluctantly agreed to the increased price. After the work was completed, the homeowner refused to pay the additional $3,000, asserting the modification was unenforceable. Is the homeowner likely correct?
- AYes, because the modification lacked new consideration.
- BNo, because the increased material costs constituted unforeseen circumstances.
- CYes, because the roofing company breached the original contract by demanding more money.
- DNo, because the homeowner voluntarily agreed to the modification.
Show answer & explanationAnswer & explanation
Correct answer: A. Yes, because the modification lacked new consideration.
Under common law, a modification to an existing contract requires new consideration to be enforceable. Since the roofing company was already obligated to replace the roof for $15,000, their demand for an additional $3,000 without offering any new or different performance lacks consideration, making the modification unenforceable.
Why the other options are wrong
- B. Unforeseen circumstances can sometimes be an exception to the pre-existing duty rule, but typically require a more severe and unanticipated event than a general surge in material costs, and the homeowner's reluctant agreement under duress might not be sufficient to validate it.
- C. While the demand for more money might constitute a breach if the homeowner had rejected it, the core issue here is the enforceability of the modification itself due to lack of consideration, not a prior breach.
- D. Voluntary agreement alone is insufficient to make a modification enforceable under common law without new consideration.
Pre-existing Duty Rule (Common Law)
Under common law, a promise to perform a pre-existing legal duty does not constitute new consideration for a contract modification.
- Applies to common law contracts (services, real estate).
- Requires new consideration for modifications.
- Performance of existing duty is not new consideration.
- Exceptions exist (e.g., unforeseen circumstances, mutual rescission and new contract).
Memory trick: Modifying a contract? Remember the 'C' for consideration, common law calls for clarity.