consideration

Consideration in Contract Law

Common Law vs. UCC Article 2

  • General Principle: Both common law contracts and UCC Article 2 contracts require consideration to support enforceability.

Common Law Consideration

  • Must be supported by bargained-for consideration.

  • Once a common law contract is formed, it typically cannot be modified without additional consideration.

  • Focuses on the static nature of contracts, emphasizing that modifications need fresh consideration to ensure fairness and enforceability.

UCC Article 2 Consideration

  • Similar to common law in requiring consideration for sales contracts.

  • Key Difference: Allows for modification of contracts without additional consideration.

    • Recognizes the fluid nature of market conditions.

    • Aims to facilitate good faith adjustments to contracts in response to changing circumstances without imposing additional legal burdens.

Example Scenario

  • Parties Involved: Ernie (seller) and Tiger (buyer).

  • Original Terms: Ernie sells 2,000 golf balls to Tiger for $1,000, with 6% interest, to be paid over 24 months.

  • Modification: After two months, due to financially strained circumstances, both agree to change the payment to $500/month.

  • Legal Outcome Under UCC: The modified contract is enforceable despite no new consideration, and the original contract is canceled.

Key Takeaway

  • Consideration Flexibility: Under UCC, the modification of contracts for the sale of goods can occur without the need for new consideration, enhancing the ability to adapt to unforeseen circumstances.