Angel v. Murray – Case Brief
Angel v. Murray, 322 A.2d 630 (R.I. 1974).
Plaintiffs: Angel and taxpayers
Defendants: Maher (D1), Murray (D2)
Facts: Maher (D1) had been providing garbage collection services to the city of Newport since 1946. In 1964 D1 and Newport agreed that D1 would receive $137,000 per year in exchange for garbage collection services for five years. The number of homes from which D1 collected increased unexpectedly by 20% and D1 requested an additional $10,000 per year for the remainder of the contract. The City Council accepted D1’s modification of the contract.
A group of taxpayers including Angel (P) filed a civil action against D1 and Murray (D2), the city treasurer, to compel D1 to repay $20,000 in payments that exceeded the original terms of the contract. The trial court entered judgment in favor of P on the grounds that there was no new consideration to render the modification of the contract enforceable, and because the parties had considered the new housing units when they entered into the contract. P asserted that D had a preexisting duty to provide garbage collection services and that there was no consideration for the higher payments. D appealed.
Issue: Under the preexisting duty rule, is an unexpected circumstance a valid ground to modify a contract?
Holding and Rule: Yes. Under the doctrine of unanticipated circumstances or conditions parties may increase the amount of compensation provided for in the contract even if no additional consideration is given.
Discussion: Under the preexisting duty rule, a modification of a contract must be supported by consideration. This rule is necessary to prevent the “hold up game” whereby a party to a contract will refuse performance unless additional consideration is given, under circumstances in which it would be very difficult or impossible for the other party to cover. Courts will not enforce an agreement that has been procured by coercion or duress and will hold the parties to their original agreement whether it is profitable or unprofitable. However, this rule of law has not been applied in situations in which one party encounters unanticipated difficulties and the other party, not influenced by duress or coercion, agrees to pay additional compensation for work already required to be performed.
The modern trend is for courts to enforce agreements modifying contracts when unexpected or unanticipated difficulties arise during the course of performance. Under UCC 2-209(1) such a modification must be in good faith and obtained without extortion. In this case the modification was fair and equitable, voluntarily entered into, and motivated by events that were not anticipated and not foreseeable at the time the original contract was made.
Disposition: Reversed, judgment in favor of D.