Schwartzreich v. Bauman-Basch, Inc.

there was no consideration for higher wages; there was a preexisting duty so there was not consideration for the promise to pay $100 per week. court got around pre-existing duty rule by saying there was mutual rescission of the old contract therefore there was no preexisting duty because the duty would have been eliminated there was a "middle contract" which eliminated the first contract, then the new contract was drawn up as the dissent argues, the middle contract was just a fiction there was no break between the contracts; the rescission was a fiction but the court says the rescission and the new contract can happen simultan eously

this does not mean that all rescissions are fictional Angel v. Murray, 322 A.2d 630 (R.I. 1974). Plaintiffs: Angel and taxpayers Defendants: Maher (D1), Murray (D2) Facts: Maher (D1) had been providing garbage collection services to the city of Newport since 1946. In 1964 D1 and Newport agreed that D1 would receive $137,000 per year in exchange for garbage collection services for five years. The number of homes from which D1 collected increased unexpectedly by 20% and D1 requested an additional $10,000 per year for the remainder of the contract. The City Council accepted D1s modification of the contract. A group of taxpayers including Angel (P) filed a civil action against D1 and Murray (D2), the city treasurer, to compel D1 to repay $20,000 in payments that exceeded the original terms of the contract. The trial court entered judgment in favor of P on the grounds that there was no new consideration to render the modification of the contract enforceable, and because the parties had considered the new housing units when they entered into the contract. P asserted that D had a preexisting duty to provide garbage collection services and that there was no consideration for the higher payments. D appealed. Issue: Under the preexisting duty rule, is an unexpected circumstance a valid ground to modify a contract? Holding and Rule: Yes. Under the doctrine of unanticipated circumstances or conditions parties may increase the amount of compensation provided for in the contract even if no additional consideration is given. Discussion: Under the preexisting duty rule, a modification of a contract must be supported by consideration. This rule is necessary to prevent the hold up game whereby a party to a contract will refuse performance unless additional consideration is given, under circumstances in which it would be very difficult or impossible for the other party to cover. Courts will not enforce an agreement that has been procured by coercion or duress and will hold the parties to their original agreement whether it is profitable or unprofitable. However, this rule of law has not been applied in situations in which one party encounters unanticipated difficulties and the other party, not influenced by duress or coercion, agrees to pay additional compensation for work already required to be performed. The modern trend is for courts to enforce agreements modifying contracts when unexpected or

unanticipated difficulties arise during the course of performance. Under UCC 2-209(1) such a modification must be in good faith and obtained without extortion. In this case the modification was fair and equitable, voluntarily entered into, and motivated by events that were not anticipated and not foreseeable at the time the original contract was made. Disposition: Reversed, judgment in favor of D. Gross Valentino Printing Co. v. Clarke, 458 N.E.2d 1027 (Ill. App. Ct. 1983). Facts: Gross Valentino Printing Co. (P) entered into a contract to print magazines for Clarke (D). Gross informed Clarke that there would be a substantial price increase for the job. Clarke did not object to the price increase at the time. P delivered the first 5,000 magazines of the total order of 15,000 magazines. D paid for the magazines at the higher price and signed the purchase order reflecting the higher price. After D received the balance of the 15,000 magazines he told P that he would not pay the higher price. The plaintiff sued the defendant for breach of contract and D asserted three affirmative defenses; lack of consideration for the promise to pay the higher price, fraudulent or innocent misrepresentation, and business compulsion. The court granted Ps motion for summary judgment and entered a judgment in Ps favor of $5116.20. D appealed. Issue: Under the UCC, is consideration required to modify a contract? Holding and Rule: No. The court held that the contract was for printed magazines and not for printing services and that the UCC applied. Under the UCC no consideration is required for contract modification. The court distinguished other cases that had characterized similar contracts as contracts for services by looking to the relative skill required in fulfilling the obligation under the contract. The court held that printing magazines did not require as much independent judgment, skill, and service as the contracts at issue in the cases relied upon by D. Regarding Ds defense of fraudulent or innocent misrepresentation, the court held that D merely alleged misstatements of future circumstances and did not allege that Ps agent knew that any of his statements were false at the time they were made. Regarding Ds defense of business compulsion (i.e. duress), the court held that D failed to allege facts sufficient to raise the defense. The defense of duress cannot be predicated upon a demand which is lawful or upon doing or threatening that which a party has a legal right to do. In order to raise the defense the party must show that the conduct of the party obtaining the advantage was tainted with some degree of fraud or wrongdoing. Ds defense failed because D did not indicate how his free will was overcome by any wrongdoing by P. Disposition: Affirmed. Pittsley v. Houser a) Asks if laying carpet is a separate service or part of the good itself b) Tests used by the court: i) Predominant factor is the purpose mostly for sale of a good or a service (when selling carpet are you selling the good or the installation) ii) Severance of the contract separate the goods and services sections iii) Apply the UCC even if situation is a service rather than a good