When does a REG contract modification need new consideration?

author: AcadiFi Team

• Topics: ["Business Law","Contracts"]
• Tags: ["reg","contracts","ucc","common-law","consideration"]
• Related articles: ["reg-contract-liability-decision-map"]
• Related questions: []
• Answer:

Start by classifying the contract before you evaluate the modification.

• If the contract is for goods, the UCC generally allows a good-faith modification without new consideration.
• If the contract is for services or real estate, common law usually requires new consideration for the modified promise.

Example:

• Goods: Delta Kitchen Supply agrees to sell 25 ovens, and both parties later revise the price because freight costs changed. Under the UCC, the modification can still work without new consideration if it is made in good faith.
• Services: Crestline Events agrees to cater a conference for 12,000 and later demands 13,500 for the same work. Under common law, that later promise is weak if nothing new is exchanged.

Use this mini-check:

The exam trap is seeing "modification" and jumping straight to the rule without asking what kind of contract you have.