Modification

Question 1

What are the rules for modification under the common law?

Answer 1

Under the common law, a modification to a contract requires new consideration in order to be enforceable.

However, a modern view of the common law approach permits modification without new consideration when the modification is due to unexpected circumstances and is fair and equitable.

(i.e. an excavator unexpectedly encounters a large rock which will cost a significant amount to remove)

Question 2

What are the rules for modification under the UCC?

Answer 2

Both parties must agree to the modification, and the modification must be in good faith.

There is no need for new consideration.

Question 3

What are no-oral modification clauses and how do they work under common law vs. the UCC?

Answer 3

These are clauses that require any modification to a contract to be in writing.

Under common law, such clauses are not enforceable.

Under the UCC, such clauses are enforceable against non-merchants if:

1. The contract is in writing and signed
2. The clause is separately signed by the party to be sued.

However, a no-oral modification clause is considered waived, and not enforceable if:

1. the parties modify the contract orally or through conduct
2. the suing party detrimentally relies on the unwritten modification