Levine v. Blumenthal
186 A. 457 (1931)
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Rule of Law:
A subsequent agreement to modify a contract by reducing a liquidated and undisputed debt must be supported by new and independent consideration to be legally enforceable.
Facts:
- On April 16, 1931, a plaintiff landlord entered into a two-year written lease with defendant tenants for a retail store.
- The lease stipulated a rent of $2,100 for the first year ($175/month) and $2,400 for the second year ($200/month).
- In April 1932, before the rent increase took effect, the defendants informed the plaintiff that due to a downturn in their business, they could not afford the increased rent.
- The plaintiff orally agreed to allow the defendants to continue paying the lower rent of $175 per month 'until business improved.'
- For the first eleven months of the second year, the defendants paid $175 per month, and the plaintiff accepted these payments.
- At the expiration of the lease term, the defendants surrendered the premises, leaving the last month's rent unpaid.
Procedural Posture:
- The plaintiff landlord sued the defendant tenants in the District Court to recover the unpaid balance of rent reserved by the original lease.
- The District Court judge found that an oral agreement to reduce the rent had been made but ruled that it was unenforceable for lack of lawful consideration.
- The trial court entered judgment in favor of the plaintiff.
- The defendant tenants appealed that judgment to this court.
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Issue:
Is a subsequent oral agreement to reduce the rent stipulated in a written lease legally enforceable when the tenant provides no new consideration beyond what was already required by the original lease?
Opinions:
Majority - Heher, J.
No. A subsequent agreement to reduce a pre-existing debt is not legally enforceable unless it is supported by new consideration. The pre-existing duty rule dictates that a promise to do what one is already legally bound to do, or the actual performance of that duty, is not sufficient consideration to form a new contract or modify an existing one. Here, the defendants were already legally obligated by the written lease to pay $200 per month. Their payment of a lesser sum ($175) was not a new detriment to them nor a new benefit to the plaintiff; it was merely a partial performance of their existing duty. The court reasoned that general economic adversity does not justify departing from the fundamental contract principle that modifications require consideration. The court also rejected the argument that the executed part of the agreement constituted a valid accord and satisfaction, as that defense also requires consideration to be valid.
Analysis:
This case is a classic illustration and reaffirmation of the pre-existing duty rule in the context of contract modification. The court's decision demonstrates a strict adherence to the requirement of consideration, refusing to create an exception for economic hardship. This reinforces the principle that for a modification to be binding, especially one that benefits only one party (a 'one-sided' modification), there must be a bargained-for exchange that provides a new benefit to the promisor or a new detriment to the promisee. The ruling solidifies the idea that accepting partial performance of a liquidated debt does not, by itself, waive the right to collect the full amount due under the original contract.
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