A homeowner hires a contractor to remodel the kitchen. The written agreement specifies that the contractor will complete the project for $25,000, payable upon completion. Halfway through the work, the contractor realizes that, because of unexpected supply-chain delays, costs will rise by $5,000. The contractor tells the homeowner that the work will not be finished unless the homeowner agrees to pay the additional $5,000. Unable to find another contractor, the homeowner reluctantly agrees. After the remodel is completed, the homeowner refuses to pay the extra $5,000. Is the homeowner legally obligated to pay the additional amount?
No, because completion of the project was a condition precedent to enforcing such modifications.
Yes, because the homeowner expressly agreed to the modification to avoid delays.
Yes, because the contractor incurred unexpected costs due to supply-chain delays.
No, because the homeowner's additional promise to pay was not supported by new consideration.
The correct answer is based on the common-law pre-existing duty rule. Under common law, a contract modification is enforceable only if each side gives new consideration. The contractor was already obligated to finish the remodel for $25,000, so its promise to do what it was already bound to do does not constitute new consideration. Because the homeowner received no new bargained-for benefit, her promise to pay an additional $5,000 is unenforceable. The incorrect answers either ignore the requirement of new consideration or misstate the effect of contractual conditions.
Ask Bash
Bash is our AI bot, trained to help you pass your exam. AI Generated Content may display inaccurate information, always double-check anything important.