Watkins & Son v. Carrig
21 A.2d 591 (1941)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A modification to a contract is enforceable, even if it is not supported by new consideration, when the parties mutually agree to rescind the original terms or when one party voluntarily releases the other from a duty under the original agreement.
Facts:
- Plaintiff and Defendant entered into a written contract for the plaintiff to excavate a cellar for a lump sum.
- The contract required the plaintiff to remove 'all material' from the site.
- The plaintiff made no investigation into the subsurface conditions before signing the contract.
- During excavation, the plaintiff discovered a substantial amount of rock, which was not anticipated by either party.
- Discovering the rock made the required performance substantially more difficult and costly for the plaintiff.
- The plaintiff informed the defendant that it would not remove the rock at the contract price.
- In response, the defendant, wishing to avoid delay, orally agreed to pay the plaintiff a special, higher price for the rock excavation.
- Relying on this new promise, the plaintiff completed the excavation, including the removal of the rock.
Procedural Posture:
- The plaintiff sued the defendant to recover the additional compensation promised for the rock excavation.
- The case was tried before a referee, who found in favor of the plaintiff.
- The defendant filed exceptions to the referee's findings and ruling, bringing the case before the Supreme Court of New Hampshire for review.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a subsequent oral agreement to pay additional compensation for performance already required under a written contract enforceable when a party encounters unforeseen and burdensome conditions?
Opinions:
Majority - Allen, C. J.
Yes, a subsequent oral agreement to pay additional compensation is enforceable under these circumstances. The court rejects the rigid application of the pre-existing duty rule, which holds that a promise to do what one is already obligated to do is not valid consideration. Instead, the court provides two rationales for enforcement. First, the parties' agreement to modify the price can be construed as a mutual rescission of the original contract term regarding price, followed by the creation of a new, valid agreement. Second, the defendant's promise to pay more for the rock excavation constituted a voluntary release or waiver of his contractual right to have the rock removed at the original, lower price. This surrender of a legal right is a valid 'gift' that discharges the plaintiff's original duty, making the new promise to pay a higher price enforceable.
Analysis:
This decision represents a significant departure from the traditional, strict application of the pre-existing duty rule in contract law. By finding an oral modification enforceable without new consideration, the court aligns the law with modern business practices where parties must adapt to unforeseen circumstances. The case establishes that courts may enforce such modifications by construing the transaction as a valid rescission and new contract, or as a waiver of a pre-existing right. This creates a more flexible and equitable framework for analyzing contract modifications made in good faith when one party confronts unexpected and substantial burdens.
Unlock the full brief for Watkins & Son v. Carrig