Restatement (Second) of Contracts · Section § 89
This section addresses the enforceability of modifications to contracts without consideration under certain circumstances.
Source: Restatement Restatement (Second) of Contracts § § 89
A promise modifying a duty under a contract is binding if the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.
This section allows for the modification of an existing contract without new consideration if the modification is fair and the circumstances justify it. Essentially, if unforeseen events make the original agreement difficult to fulfill, the parties can agree to a reasonable change.
Modifications must involve circumstances that were not anticipated by the parties at the time of contracting.
The modification must be fair and equitable.
Illustration 1
A contractor agrees to complete a construction project but later encounters unexpected soil issues requiring additional work. The parties agree to a reasonable increase in the contract price to account for this unforeseen issue.
Illustration 2
A supplier promises to deliver goods at a set price but later learns that the cost of raw materials has significantly increased. The parties negotiate a new price that reflects the change in circumstances.
The court upheld an oral modification of a contract on the grounds that the modified terms were necessary to address unanticipated circumstances, following the principles of § 89.
Section 89 is important for practitioners as it provides a pathway for parties to adapt to unexpected events without the strict requirement for new consideration. It supports the idea of equity in contractual dealings, ensuring fairness in the enforcement of modified agreements.