Contract Modification

CONTRACTS

1. Did Able and Baker validly modify their contract when Able agreed to pay the

additional $1,000? Discuss.

Abel entered into a contract with Baker whereby Baker was to dig a well on Able’s property. The written agreement stipulated that Able would pay Baker $3,000 upon completion of the well. It is clear from the facts given that an enforceable contract has been formed so as to bind Abel and Baker. Abel asked Baker to drill a well and Baker laid out a price. No depth or timeframe for completion of work was set. Abel agreed to pay the cost of $3000 upon completion. This demonstrated Abel’s intent to be bound by all of the terms of the parties. Baker agreed to dig the well for the amount set therefore, sufficient consideration is present since both parties incurred a legal detriment.

While digging the well Baker struck solid rock and was unable to dig any deeper with his present equipment. Baker had been digging wells in the area for over 10 years and had never experienced or heard of striking solid rock before reaching an adequate source of water. Baker telephoned Able and told him that in order to continue digging the well he would have to rent additional and more powerful equipment that would cost $1,000 and asked Able to pay that amount. Able told Baker that he needed the well completed and reluctantly agreed to pay the additional $1,000. Baker rented the additional equipment and finished the well two days later.

Because this contract is governed by common law, modification requires new consideration. Consideration is something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances. Under common law, modification may be either express (words) or implied (conduct). Baker required additional equipment, which would cost $1000 to rent, therefore causing Baker a legal detriment to which was not previously agreed upon or discussed. Baker subsequently contacted Abel and...