A builder contracted with a landowner to construct a house for $300,000. After beginning construction, the builder discovered that due to an unexpected global shortage, the price of copper piping had tripled, increasing the builder's costs by $20,000. The builder informed the landowner that they could not complete the job at the agreed price. The landowner, anxious to have the house completed on schedule, agreed in writing to pay the builder an additional $15,000. Upon the house's completion, the landowner paid the original $300,000 but refused to pay the extra $15,000. Is the landowner's promise to pay the additional $15,000 enforceable?
No, because the builder's statement that they could not complete the job constituted anticipatory repudiation.
No, because the builder had a pre-existing duty to construct the house for $300,000.
Yes, because the modification was a fair response to an unanticipated circumstance.
Yes, because the landowner's promise to pay more was made in writing.
The landowner's promise is likely enforceable. The traditional common law pre-existing duty rule states that a promise to perform an act one is already obligated to do is not valid consideration for a modification. However, the modern view, as articulated in the Restatement (Second) of Contracts § 89, provides an exception where a contract modification is fair and equitable in light of circumstances that were not anticipated by the parties when the contract was made. The unexpected tripling of a key material's price would likely be considered an unanticipated circumstance, and the agreement to split the difference can be seen as fair and equitable. Therefore, the modification is likely enforceable even without new consideration from the builder.
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