This study source was downloaded by 100000765148722 from CourseHero com on 01 12 2023 15 06 04 GMT 06 00 https www coursehero com file 180529232 CL611 mod2modelanswer Quiz 2docx MODEL ANSWER CONTRACTS II ESSAY 1 MODULE 2 NOTE TO STUDENTS The model answer uses the boldfaced labels ISSUE RULE ANALYSIS and CONCLUSION for illustrative purposes to help highlight theseaspects of the Model Answer for you You should not include these boldfaced labels inyour essay answers ISSUE 1 Did Able and Baker validly modify their contract when Able agreed to pay the additional 1 000 RULE PART 1 A Applicable law Since this contract involves services Baker was to perform for Able the modern common law would apply to resolve any contractual issues between the parties In every Contracts essay the rule really has two components the controlling law that is is thiscontract governed by the UCC or by common law and the relevant rule of law The best approach is to articulate the controlling law first since it has the potential to alter the relevant rule of law depending on whether the UCC or the common law is controlling RULE PART 2 Formation of contract There cannot be a valid modification of a contract unless a contract was initially validly formed The facts state that Able and Baker entered into a written contract whereby Baker was to dig a well in exchange for 3 000 Therefore a contract clearly was formed Although formation is clear it is still an indispensable part every analysis After all you cannot modify a contract that doesn t exist That said don t worry about going into detail a summary statement like this is sufficient to do the job ANALYSIS B Valid modification A modification is an agreement to alter or amend an existing contract To be valid a modification must be the product of good faith bargaining and must be supported by new consideration This section is organized like a mini IRAC giving the rule the requirements for modification and then unpacking each of the elements of that rule 1 Good faith bargaining Baker requested the change it the contract the payment of an additional 1 000 for equipment rental as a result of encountering conditions unlike any he had ever encountered previously Since this was therefore an unforeseeable condition Baker was making this request in good faith Although Able reluctantly agreed to Baker s request there is no indication that he was forced or coerced into doing so Therefore in all probability the modification agreement will bedeemed to be the product of good faith bargaining This study source was downloaded by 100000765148722 from CourseHero com on 01 12 2023 15 06 04 GMT 06 00 https www coursehero com file 180529232 CL611 mod2modelanswer Quiz 2docx 2 New Consideration Consideration involves a bargained for exchange that constitutes a legal detriment to each promisee Under the agreement as modified Able was to pay Baker 4 000 instead of the 3 000 stated in the initial contract So there was a legal detriment to Able in having to pay the additional 1 000 However under the initial contract Baker was obligated to dig a well on Able s property Under the agreement as modified Baker is still promising only to dig the well In other words as a result of the initial contract Baker was under a pre existing duty to dig the well and there would therefore be no consideration to support the modification 3 The general rule is that a pre existing duty cannot serve as consideration since the party who already had that duty was required to perform regardless of whether the present contract had been formed 4 Exception to Consideration An agreement to modify an executory contract is binding if the modification is fair and equitable in view of circumstances not anticipated when the contract was made Clearly the presence of solid rock would be such an unanticipated condition since Baker had been digging wells in the area for over 10 years and had never encountered solid rock before reaching an adequatewater source The modification covered only the actual cost of the rental of equipment needed to dig the well This would seem to be fair and equitable under the circumstances Therefore under this exception to the pre existing duty rule the modification would appear enforceable 5 Defense A modification is subject to all formation defenses However none would appear to be applicable Even though the agreement between Able and Baker was oral the contract as modified does not fall within any of the provisions of the statute of frauds In addition it is permissible for a written contract to be modified by oral agreement 6 CONCLUSION Therefore the contract appears to have been validly modified and Able would be obligated to pay the additional 1 000 ISSUE Can Baker recover any additional money from Able Given the general nature of the second interrogatory it will help the grader to follow your writing if you have a transitional section like this to focus in on the specific amount in dispute and the nature of the dispute not to mention help clarify your thinking about the issues that are actually in play in the question III Recovery As discussed above since the contract was validly modified Able would be obligated to pay Baker 4 000 for completing the well However Able paid Baker only 2 500 Whether Able would be liable to pay any additional amount rests with an interpretation of his sending a check marked payment in full and Baker cashing the check RULE A Accord and satisfaction An accord is a form of a modification whereby substituted performance is accepted in place of a pre existing duty A satisfaction is the performance of the accord ANALYSIS When Able sent Baker a check for 2 500 marked payment in full he was making an offer to an accord Baker s cashing of the This study source was downloaded by 100000765148722 from CourseHero com on 01 12 2023 15 06 04 GMT 06 00 https www coursehero com file 180529232 CL611 mod2modelanswer Quiz 2docx Powered by TCPDF www tcpdf org check may operate as both an acceptance of the offer to an accord and a satisfaction if certain conditions are met 1 Offered in full settlement The offer to an accord must be made in full settlement of any obligations owed Since Able wrote on the check payment in full this indicates that is was meant to be in full settlement of the obligations between the parties Therefore this requirement is met 2 Attempted reservation of rights Baker attempted to cash the check and reserve rights to possibly sue for additional compensation by