Contracts II: Modifications

This set of flashcards includes critical vocabulary and definitions related to contract modifications, common law principles, UCC guidelines, and relevant case law.

What are some ways to issue spot modifications?

• After the K is formed, the parteis change or more terms of the K.

• And one party seeks to excuse nonperformance because it believes the change is unenforceable.

• Address whether the mod is enforceable or not.

What is the rule for modifying common law contracts?

General principles of K formation also apply to modifications:

• Mutual assent

• Possible requirement of signed writing.

• Consideration.

What is the traditional rule for Modifications?

Modifications require independent consideration to be enforceable:

• Based on a pre-existing legal duty rule

• What is the rationale? To prevent coerced modifications

What is the modern approach to modifications?

AKA “The exceptions” to the traditional common law rule: Move away from requiring consideration in certain contexts:

1. Unforeseen circumstances

2. Statute

3. Reliance

4. Mutual release/rescission.

What is the rule for Modifications under Article 2 under the UCC

Modification does not need consideration to be enforceable

BUT must be in good faith

Good faith = Honesty in fact (HIF) + Observance of reasonable commercial standards of fair dealing in the trade.

Must the SOF be satisfied when there is a modification under Article 2 of the UCC?

Yes if the contract as modified falls within teh SOF then it must satisfy the SOF.

What is a no oral modification clause?

A clause that expressly precludes contract modifications except in writing. It’s a private SOF (we won’t agree to contract changes unless in writing)

Will a NOM clause always be enforced?

Under 2-209 if a contract has a no oral modification clause then that clause will be enforced. BUT there is a twist where a merchant uses form.

But where the merchant has supplied a form with a NOM clause to the other party, the clause is enforceable only if:

1. The other party is a merchant OR

2. Other party has separately signed the NOM clause.

What is the rule for waiving the NOM clause?

An attempt to orally modify that fails under either 2-209 or 2-209(3) may still operate as a waiver of the NOM clause.

What is the rule for retracting the waiver?

Once a party has waived the NOM clause by conduct, they may retract the waiver by reasonable notice, unless retraction would be unjust due to other party’s reliance.