Mayfair Ltd. would be obligated to pay Speedymove the increased price of £8,000 because the modification made to the contract was valid.
A binding contract is created through the process of mutual assent (offer and acceptance) and consideration, definiteness, and when no valid defenses or excuses to contract exist. In this case, both parties appear to agree that a valid contract was formed and existed to deliver 150 frames for an exhibition at the price of 6,000, 25 frames at a time over a period of six weeks, although the fact pattern does not specify whether the contract is oral or written, therefore this analysis will not analyze issues related to oral and written modifications. However, parties to a contract are “as free to change it after making it as they were to make it in the first instance.” Schwinder v. Austin Bank of Chicago, 348 Ill.App.3d 461, 809 N.E.2d 180, 189, 284 Ill.Dec. 58 (1st Dist. 2004). When parties exercise this right, the result is a modified contract. In Schwinder, the First District explained that “[a] ‘modification’ of a contract is a change in one or more respects which introduces new elements into the details of the contract or cancels some of them, but leaves the general purpose undisturbed.” Id. It generally occurs when the parties agree to “alter a contractual provision or to include additional obligations, while leaving intact the overall nature . . . of the original agreement.” Id.
The modification of a contract does not require its own consideration if the modification was made in good faith and was voluntarily accepted by both parties. In Angel v. Murray, 322 A.2d 630 (RI 1974), the Supreme Court of Rhode Island upheld the contract, citing the Universal Commercial Code (UCC) that allowed for modification of contracts without consideration if the modifications were made in good faith and were voluntarily accepted by both parties. The UCC applies only to transactions involving goods, and the case at bar for the Supreme Court of Rhode Island involved a contract for services, therefore the Court looked to §89D(a) of the Restatement Second of Contracts, which requires that the modification was made before the contract was fully performed by either side, the circumstances prompting the modification were unanticipated by the parties, both parties agree to the modification and the modification is fair and equitable. Applying the criteria of the Restatement, the Court upheld the contract, noting that the unexpected increase was unanticipated and that the additional $10,000 was a fair price for the additional services.
Like contract formation, contract modification requires mutual assent — a meeting of the minds. Any proposed modification will fail if mutual assent is not shown. Delcon Group, Inc. v. Northern Trust Corp., 187 Ill.App.3d 635, 543 N.E.2d 595, 600, 135 Ill.Dec. 212 (2d Dist. 1989). In UIDC Management, Inc. v. Sears, Roebuck & Co., 167 Ill.App.3d 81, 520 N.E.2d 1164, 117 Ill.Dec. 813 (1st Dist. 1988), the court did not enforce a contractual modification because the plaintiff was unable to show that the parties had mutually agreed to the modification. The case centered around a contract that required the defendant to maintain its shopping center in a “first class manner”. 520 N.E.2d at 1166. During the first nine years of the contract, the plaintiff performed the required maintenance and the defendant paid its pro rata share from year to year. In the tenth year of the contract, the defendant notified the plaintiff that it intended to perform its own maintenance. Id.
The plaintiff sued, alleging that the parties modified the contract through their course of dealing in the past nine years. 520 N.E.2d at 1167. The plaintiff argued that the yearly agreements for the plaintiff to maintain the shopping center resulted in a modification to the original contract. The court stated that although the parties may have entered into yearly agreements related to maintenance, the writings failed to show a voluntary, mutual assent to modify the contract selecting the plaintiff to maintain the property for the remaining period of the contract. Id.
In this case, a valid modification to the contract was made when Speedymove came across unforeseen difficulties, specifically the size of the frames. While at common law, modification of an existing contract must be supported by consideration, agreements to modify a contract may still be enforced if there are unforeseen difficulties, and one of the parties agrees to compensate the other when the difficulties are discovered. See, e.g., United States v. Cook, 257 U.S. 523 (1922); Merrill-Stevens Dry Dock & Repair Co.
v. United States, 96 F. Supp. 464 (Ct. CI. 1951); Mobile Turnkey Housing, Inc. v. Ceafco, Inc., 294 Ala. 707, 321 So. 2d 186 (1975); Angel v. Murray, 113 R.I. 482, 322 A.2d 630 (1974). As stated by one court, this exception to the pre-existing duty rule should be limited to instances "where the refusal to perform was equitable and fair, and the difficulties were substantial, unforeseen and not within the contemplation of the parties when the original contract was made.” Linz v. Schuck, 106 Md. 220, 233, 67 A. 286, 289 (1907); accordWatkins & Son v. Carrig, 91 N.H. 459, 21 A.2d 591 (1941).
Mayfair Ltd. may argue that the size of the frame should not be considered an unforeseen difficulty, particularly for a company that is in the business of shipping items, and therefore should be familiar with or request the exact sizing of an item, before agreeing to ship it at a certain price or during a certain time frame. However, Speedymove can argue that the information was not provided by Mayfair or was provided incorrectly, causing Speedymove to provide an inaccurate estimate of the cost and time that would be required to ship the item. Speedy move would likely be succesful in their argument, as the fact pattern does not indicate that the frame size was provided in advance or that the price charged for the additional size/time was unfair. Therefore, considering that the circumstances can be classified as unforeseen difficulties and the additional amount as the accurate cost of the unexpected change in circumstances, the modification is fair.
An “excuse” can render a contract void or voidable, such as misrepresentation, duress or undue influence, and Mayfair Ltd. may choose to argue that Speedymove exercised undue influence or duress, as they knew that the frames were required for an exhibition in a certain time period. The law recognizes that some modifications should be upheld because they are entered into freely and some should be deemed unenforceable because they derive from coercion or duress. See, e.g., Watkins & Son v. Carrig, 91 N.H. 459, 21 A.2d 591 (1941). Duress is a wrongful act or threat that prevents a party from having meaningful choice. To qualify as duress, the threats must be improper, induce assent, and be sufficiently serious to justify the assent. Any wrongful act or threat that deprives a party of meaningful choice constitutes duress. However, there is no wrongful act or threat by Speedymove in the fact pattern presented, simply an unforeseen circumstance that caused the frames to be delivered in a different amount and time period, notably still reaching in time for the exhibition.
The concept of undue influence also does not apply here, where one party is dominant and other dependent (due to lack of expertise or mental capacity) and the dominant party is held to higher standard. For example, minors and elderly people are often under the influence of guardians. Thus, they may be unduly influenced by an unscrupulous guardian. Undue influence can arise from other relationships such as attorney-client, doctor-patient or parent-child. In the following example, undue influence is exerted to obtain a favorable term for a contract. The mother of a son and a daughter was dying. The daughter visited her mother in a hospice facility and said, "You know that I have always been the good child, and my brother has always been the bad child. Even so, you have left your property in the will to us fifty-fifty. But it would be really nice if you would sell me the family home for $100,000." "I don't know," said the mother. "It is worth a lot more than that - at least $250,000." "That is true," said the daughter. "But I have always been good and visited you, and my brother has never visited you, so that ought to be worth something. And besides, if you won't sell me the house for that price, maybe I won't visit you anymore, either." "Oh, I wouldn't want that," said the mother, and she signed a contract selling the house to her daughter for $100,000. Shortly thereafter, the mother died. When her son found out that the house had been sold and was not part of his mother's estate, he sued to have the contract avoided on behalf of the mother. The undue susceptibility element can be established either by the circumstances (e.g., the mother's illness) or the existence of a confidential relationship (such as a parent-child relationship). The following facts support a finding of excessive pressure: the daughter's statement that she might not visit her mother, the daughter pressuring her mother to sell the property while her mother was in a hospice facility, the mother assenting without obtaining independent advice, and the mother's susceptibility to pressure. Unlike the case study cited above where one party has more knowledge or power than the other, both parties are companies that bargained at for a fair exchange, and were experts in their industry. No party would be considered a “dominant” party in this case.
In conclusion, due to the existence of a valid, modified contract, Mayfair Ltd. will be required to pay the increased price in full to Speedymove for delivery of the frames.
References
Angel v. Murray, 113 R.I. 482, 322 A.2d 630 (1974).
Linz v. Schuck, 106 Md. 220, 233, 67 A. 286, 289 (1907);
Merrill-Stevens Dry Dock & Repair Co.v. United States, 96 F. Supp. 464 (Ct. CI. 1951);
Mobile Turnkey Housing, Inc. v. Ceafco, Inc., 294 Ala. 707, 321 So. 2d 186 (1975);
United States v. Cook, 257 U.S. 523 (1922);
Watkins & Son v. Carrig, 91 N.H. 459, 21 A.2d 591 (1941).
