George Mason School of Law
Contracts I
XX. Contract Modification
F.H. Buckley
fbuckley@gmu.edu
1
Contract Modification
 As relational contracts are long term,
conditions may change and prompt a
modification of the agreement
 Should there be any restrictions on this?
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Alaska Packers 381
Russia
Pyramid Harbor AK
3
Alaska Packers
 Will a promise to perform that which
the promisor was already bound to do
under a prior contract satisfy the
consideration requirement?
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Alaska Packers
 Restatement § 73. Performance of a legal duty
owed to a promisor which is neither doubtful
nor the subject of honest dispute is not
consideration; but a similar performance is
consideration if it differs from what
was required by the duty in a way which
reflects more than a pretense of bargain.
 Illustration 4 (Lingenfelder at 383-84)
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Alaska Packers
 Restatement § 175(1)
If a party's
manifestation of assent is induced by an
improper threat by the other party that leaves
the victim no reasonable alternative, the
contract is voidable by the victim.
 Illustration 5
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Alaska Packers
 Restatement § 176(1)(d) A threat is
improper if
 (d) the threat is a breach of the duty of
good faith and fair dealing under a contract
with the recipient.
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Alaska Packers
 Restatement § 89 MODIFICATION OF
EXECUTORY CONTRACT. A promise modifying a
duty under a contract not fully performed on
either side is binding (a) if the modification is
fair and equitable in view of circumstances not
anticipated by the parties when the contract
was made; or (b) to the extent provided by
statute; or (c) to the extent that justice
requires enforcement in view of material
change of position in reliance on the promise.
 Illustrations 1 (Brighenti at 386), 3
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Alaska Packers
 How would you decide Alaska Packers
under these standards?
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Alaska Packers
 How would you decide Alaska Packers
under these standards?
 The finding of fact at p. 382
10
Alaska Packers
 Qu. the changed circumstances under
Angel v. Murray p. 385
11
Alaska Packers
 Qu. the changed circumstances under
Angel v. Murray p. 380
 Brian v. Brighenti p. 381
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Alaska Packers
 No modification clauses: Will they be
enforced?
 Cf. Restatement 311 comment a: “The
parties to a contract cannot by agreement
preclude themselves from varying their
duties to each other by subsequent
agreement.”
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The UCC
Consideration out, Good faith in
 UCC § 2-209(1) Modification, Rescission
and Waiver. An agreement modifying a
contract within this Article needs no
consideration to be binding.
 UCC § 1-304. Every contract or duty
within [the Uniform Commercial Code]
imposes an obligation of good faith in its
performance and enforcement.
14
UCC 2-209:
No Modification Clause
 A signed agreement which excludes
modification or rescission except by a signed
writing cannot be otherwise modified or
rescinded, but except as between merchants
such a requirement on a form supplied by the
merchant must be separately signed by the
other party.
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UCC 2-209(2):
No Modification Clause
 (2) A signed agreement which excludes
modification or rescission except by a signed
writing cannot be otherwise modified or
rescinded, but except as between merchants
such a requirement on a form supplied by the
merchant must be separately signed by the
other party.
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UCC 2-209(2):
No Modification Clause
 (2) A signed agreement which excludes
modification or rescission except by a signed
writing cannot be otherwise modified or
rescinded, but except as between merchants
such a requirement on a form supplied by the
merchant must be separately signed by the
other party.
17
UCC 2-209(4): Waiver
 (4) Although an attempt at modification or
rescission does not satisfy the requirements of
subsection (2) or (3) it can operate as a
waiver.
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UCC 2-209
 How is a waiver different from an agreement of
modification?
 (We’ll see this again in Wisconsin Knife Works at 639
next term)
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Are Termination Agreements
different?
 El Paso Natural Gas p. 388
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Alexi Yashin at 387
 All I wanted was a termination
agreement…
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What are the drafting choices where
good faith is required throughout?




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Relational contracting
Vertical integration
Termination rights
Good Faith policing by the courts?
Eli Lilly at 391
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Eli Lilly at 391
 Was this about good faith norms or
simple termination rights?
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Eli Lilly at 391
 Was this about good faith norms or
simple termination rights?
 Here the good faith party sought to
terminate. Suppose instead it had been
the bad faith party?
 Medinol
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Eli Lilly at 391
 So how would you draft a provision
that imposed good faith duties
throughout?
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