Preexisting Duty Rule
Rule
Performance of, or a promise to perform, a legal duty already owed to the promisor is not valid consideration for a new promise. Contract modifications therefore require additional consideration beyond the preexisting obligation.
Elements
- An existing legal obligation to perform
- A promise to perform (or actual performance of) that same obligation
- No new or different consideration exchanged for the modification promise
Exceptions
- Unanticipated circumstances (Rest. 2d § 89): A modification to an executory contract is binding without consideration if it is fair and equitable in view of circumstances not anticipated when the contract was made
- UCC § 2-209: Modifications to contracts for the sale of goods require no consideration if made in good faith — the preexisting duty rule does not apply
- Mutual rescission: Courts fictionally treat a modification as a mutual rescission of the old contract followed by formation of a new one, bypassing the doctrine (though this is manipulable — Alaska Packers)
- Additional duties: Adding even a small new obligation satisfies the doctrine’s formal requirements
- Accord and satisfaction: Settlement of a genuine dispute over an unliquidated obligation satisfies consideration requirements without need for fresh consideration
Policy
The doctrine prevents “hold-up” problems — a party in the middle of performance threatening to breach unless given additional compensation. However, it is criticized as formalistic and potentially unjust when changed circumstances genuinely justify modification. Rest. 2d § 89’s unanticipated-circumstances standard better captures the legitimate policy concern.
Key Cases
- Alaska Packers’ Association v. Domenico — modification demanded mid-performance with no unanticipated circumstances held unenforceable; illustrates the hold-up problem
- Angel v. Murray — modification enforced under Rest. 2d § 89 where unanticipated population growth changed trash collection economics