Lloyd's Maritime and Commercial Law Quarterly
ONE-SIDED CONTRACT MODIFICATIONS AND THE REQUIREMENT OF CONSIDERATION
Sirko Harder *
The parties to an existing contract may agree that the obligations of one party (but not of the other) are to be modified. For a long time, one-sided contract modifications were considered unenforceable for lack of consideration. It is now widely recognised that this approach fails to give effect to the parties’ autonomy and intention. Two alternative approaches have emerged across the common law world. One approach is to find consideration in a practical benefit obtained by the promisor. The other approach is to abolish the consideration requirement for contract modifications. This article investigates the merits of both alternative approaches.
I. INTRODUCTION
For a promise not made in a deed to be enforceable as a contractual promise, common law systems require consideration to be given in return for the promise. Consideration may in short be defined as a detriment to the promisee or a benefit to the promisor.1 The consideration requirement creates problems where the parties to an existing contract agree that the obligations of one of the parties (but not of the other) are to be modified. For a long time, the courts in common law countries refused to enforce one-sided contract modifications by reasoning as follows: An agreement that purports to modify a contract is itself a contract and thus subject to the consideration requirement, and the party in whose favour the original contract is to be modified has provided no consideration for the modification promise.
Over time, however, courts and commentators have recognised that this approach fails to give effect to the parties’ autonomy and intention, and while the approach may in the past have been necessary to provide protection against coercion,2 this function can now be fulfilled by the doctrine of economic duress. However, there is no universal agreement on the correct solution. Two alternative approaches have emerged across the common law world. One approach is to continue to apply the consideration requirement to
* Reader, Sussex Law School. An earlier version of this article was presented at the Obligations IX Conference at the University of Melbourne in July 2018. I would like to thank the audience of the relevant conference panel for a lively discussion of the topic of this article. I would also like to thank my colleague Joanna Wilson and the anonymous reviewer for their helpful comments. Any errors are my own.
1. Currie v Misa (1875) LR 10 Ex 153, 162 (Lush J). A detriment to the promisee was required in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 (HL), 855 (Lord Dunedin). However, as will be shown in this article, it is recognised today that a benefit to the promisor is sufficient.
2. An example is Stilk v Myrick (1809) 2 Camp 317; 170 ER 1168, discussed post, Part II(a).
One-sided contract modifications and consideration
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