Angel v. Murray
Citation: 113 R.I. 482 (1974)
Facts
Maher had a five-year contract with the City of Newport to collect garbage for a fixed price. During the contract, the city grew significantly with new housing developments, substantially increasing the amount of garbage. Maher requested and received additional compensation beyond the contract price. Taxpayers challenged the modifications as unenforceable under the preexisting duty rule.
Issue
Is a modification to an existing contract enforceable when the modification is requested due to unanticipated circumstances, even without new consideration?
Holding
Yes. The preexisting duty rule should not bar enforcement of a contract modification that was sought in good faith due to unanticipated changed circumstances, and not due to extortion or coercion.
Rule
Modification exception to preexisting duty rule: A contract modification is enforceable without new consideration when: (1) it was prompted by unanticipated circumstances not foreseen at the time of contracting, (2) the modification was fair and equitable given the changed circumstances, and (3) the modification was agreed to voluntarily without duress or coercion.
This approach reflects UCC § 2-209 (modifications need no consideration for sales of goods) and the trend toward enforcing modifications in good faith.
Significance
- Key Rhode Island case relaxing the strict preexisting duty rule for modifications
- Most courts still follow the traditional preexisting duty rule (requiring new consideration for modifications), but apply exceptions for good faith modifications under unanticipated circumstances
- UCC § 2-209 abolished the consideration requirement for modifications of goods contracts entirely
- Restatement (Second) § 89: a contract modification is binding if it is fair and equitable in view of circumstances not anticipated when the contract was made