Contracting parties often disagree on the meaning of their terms and conditions, in particular on the amount of money actually due. If the dispute is real (and not an unjustified attempt by a party to avoid payment of an amount clearly due), it can be settled by the agreement of the parties on a fixed amount as the amount due. This second agreement, which replaces the first disputed agreement, is called an agreement, and if the payment or other condition is met, the second contract concluded is called agreement and satisfactionAn agreement to replace a disputed contract with a new contract; If implemented, the agreement is respected. An action for alleged breach of contract could be defended on the basis of subsequent agreement and satisfaction. An unforeseen difficulty in the performance of a contract so great that the hypothesis of a modification of the contract is justified. Contracts arising after the conclusion of a contract can also be resolved by agreement and satisfaction. Difficulties that no one could have foreseen can sometimes serve as a catalyst for another promise that seems to be ignored, but is nevertheless enforced by the courts. Let`s say Peter hires Jerry to build a house for $390,000. During the excavation, Peter unexpectedly discovers quicksand, which will cost an additional $10,000 to remove. To make sure Peter doesn`t hesitate, Jerry promises to pay him $10,000 more than originally agreed. But when the house is finished, Jerry breaks his promise. Is Jerry responsible? Logically, perhaps not: Peter suffered no legal disadvantage in exchange for the $10,000; He had already ordered the contract for the construction of the house. But most courts would allow Peter to rely on the theory that the original contract was terminated or modified, either by mutual agreement or by an implied condition, that the original contract would be performed in the event of unforeseen difficulties.
In short, the courts will impose mutual recognition of the parties that unforeseen conditions have rendered the old contract unfair. The parties either amended their original contract (which requires common law consideration) or abandoned their original contract and entered into a new contract (a new contract replacing an old one, or a new party to a contract replacing an earlier part). Let`s look at an actual court case that exemplifies the concept of consideration. In 2004, the Washington State Supreme Court ruled Labriola v. Pollard Group, Inc. Pollard Group was a company that provided printing services in Tacoma. In 1997, the company hired Anthony Labriola as its salesman. His employment contract stipulated that he was a voluntary worker, which meant that he could be dismissed at any time without giving a reason. As described above, the consideration does not need to be reasonable, but it must be negotiated by both parties and legally sufficient. Legally sufficient means that the consideration is either: It is a question of fact whether the new circumstance is new and sufficiently difficult to transform an already existing obligation into an unforeseen difficulty.
If Peter comes across a small quicksand bag – say two gallons – he will obviously have to deal with it as part of his already agreed work. If he encounters as much quicksand as an Olympic swimming pool would fill, it`s clearly unexpected, and he should have more to take care of. Somewhere in between the two amounts of quicksand there is enough stuff, so Peter`s duty to remove it is outside the original agreement and new considerations would be needed in exchange for its removal. If you`re studying contract law in the United States, you`ll likely learn that consideration must be «adequate.» If the consideration is insufficient, a court can say that there is no contract. However, this does not mean that there must be «sufficient» consideration. The counterpart must be «legally» sufficient. Not amenable to settlement by agreement and satisfaction is the situation in which a party has a pre-existing obligation and is offered an advantage to perform it. If the only consideration offered to the promisor is an act or promise to act to fulfill a pre-existing obligation, there is no valid contract.
As Denney v. Reppert (Section 11.4.2 «Consideration: Pre-existing Commitment»), the Promisor does not suffer any legal disadvantage if he promises to assume what he is already obliged to do. If a person is promised a benefit for not doing what he is already forbidden to do, there is no quid pro quo. David is sixteen years old; His uncle promised him $50 if he abstained from smoking. The promise is unenforceable: legally, David must already quit smoking, so he promised not to give up anything to which he was legally entitled. As already mentioned, the difficulty arises when it is not clear whether a person has a pre-existing obligation or whether such unforeseen difficulties have arisen that justify the acknowledgement that the parties have amended the contract or completed a novation. What happens if Peter insists on an additional payment to remove a wheelbarrow full of quicksand from the excavation? Admittedly, this is not enough «unforeseen difficulty». How much quicksand is enough? There are conditions that the counterparty must meet in order to have sufficient legal value. A party cannot promise to do something if there is already a legal obligation to do so. A police officer cannot receive a reward for the capture and arrest of an outlaw.
The promisor must perform an action to which he is not normally obliged. A police officer cannot hire independent security services for his neighbourhood while on duty in his regular job. He already has an obligation to secure the neighborhood. To repay the liquidated debt of $8,000 to the surgeon, the patient sends a cheque for $6,000 that says «full payment.» The surgeon retrieves it. There is no dispute. Can the surgeon sue for the remaining $2,000? This seems to be an agreement: by cashing the cheque, the surgeon seems to agree with the patient to accept the full payment of $6,000. But there is a lack of consideration. Since the surgeon owes more than the nominal amount of the cheque, he does not cause any legal disadvantage to the patient by accepting the cheque. If the rule were different, debtors could easily induce creditors in difficulty to accept less than the amount owed by providing liquidity immediately.
The key to the applicability of a «full payment» legend is the nature of the debt. If it is not liquidated or there is a dispute, «full payment» can serve as agreement and satisfaction if it is written on a cheque accepted for payment by a creditor. But if the debt is liquidated and not contested, there is no consideration if the check is for a smaller amount. (However, it can be argued that if the audit is considered an agreement to amend a contract of sale, no consideration is required under Article 2-209 of the Uniform Commercial Code (UCC).) Let`s look at an interesting case involving a counterpart between an employer and an employee in an employment contract. For consideration to be considered valid, two elements must be present: the disadvantages of a contract are something that one party renounces in exchange for the consideration of the other party. For example, if a person buys a car from a dealership, the money paid for the car is the person`s disadvantage. Reciprocity refers to the agreement between the parties to the contract to comply with its terms. Ability refers to the fact that each party is mentally strong enough to understand what they agree on and old enough to make a deal. After all, legality means that only legally valid contracts can be executed.