Contracts—Modification Agreements: Need for New Consideration; Economic Duress—Rosellini v. Banchero, 83 Wn. 2d 268, 517 P.2d 955 (1974)

Authors

Curtis L. Crocker

Abstract

Plaintiff, a contractor, and defendant, a property owner, orally contracted for the construction of defendant's building. The work was to be done on a time and materials basis with a ceiling price of $56,146, plus extras ordered by defendant and sales tax. Payments were to be made to plaintiff in installments' upon presentation of invoices for costs incurred. When construction was approximately 90 percent completed and the subcontractors were demanding payment from him, plaintiff submitted an invoice for $16,720. Defendant at that point manifested a vague dissatisfaction with the "whole job," withheld payment and proposed a written modification agreement lowering the ceiling price to $52,000. Immediately after plaintiff signed the modification agreement, defendant made complete payment of the invoice. Upon completion of the building, plaintiff claimed payment in accordance with the original contract. The parties were unable to agree on the balance due and plaintiff sought legal relief. The trial court set aside the attempted modification of the ceiling price on grounds that it lacked consideration and was signed by plaintiff under duress. The Washington Court of Appeals reversed, finding that there was consideration in the settlement of a bona fide dispute and that no duress or business compulsion forced the agreement. The Washington Supreme Court, however, reversed the court of appeals and refused to enforce the attempted modification. Finding no dispute between the parties, the court held that the modification was unsupported by new consideration. The court, apparently by simply weighing cases without analyzing doctrine, resolved a conflict in Washington case law as to whether a contract modification must be supported by new consideration by overruling those decisions upholding modification without consideration. Held: A subsequent agreement modifying an existing contract must be supported by new, mutual consideration independent from the consideration involved in the original contract. The court did not reach the issue of economic duress. Rosellini v. Banchero, 83 Wn. 2d 268, 517 P.2d 955 (1974). This note does not quarrel with the result in Rosellini. It is submitted, however, that the court should have based its decision on the doctrine of economic duress rather than embrace the rule that new consideration is required to render a contract modification legally enforceable. This note will examine the strengths and weaknesses of a rule requiring mutual consideration where an existing contract is modified and conclude the rule is dysfunctional. The note will also explore the doctrine of economic duress in Washington and how it could have been applied to the facts in Rosellini.

First Page

960

Recommended Citation

Curtis L. Crocker, Recent Developments, Contracts—Modification Agreements: Need for New Consideration; Economic Duress—Rosellini v. Banchero, 83 Wn. 2d 268, 517 P.2d 955 (1974), 50 Wash. L. Rev. 960 (1975).
Available at: https://digitalcommons.law.uw.edu/wlr/vol50/iss4/6