The Pre-Existing Duty Rule, Contract Modification, and Accord & Satisfaction

This lesson presents an introduction to the doctrine that the performance of a pre-existing duty, or a promise to perform such a duty, does not constitute a sufficient consideration to make a promise binding. Through questions based on a series of hypothetical cases, underlying reasons for the doctrine are considered, as well as its ramifications in various contexts. Coverage includes: the performance of duties owed to the promise or third parties as consideration; modifications on one side of executory contracts; substituted contracts following rescission; executory accords; satisfaction; liquidated claims and offers to settle unliquidated claims.

Learning Outcomes

On completion of the lesson, the student will be able to:

1. Explain how the common law pre-existing duty rule applies to modifications.
2. Determine whether the modification of a contract is enforceable under the modern common law rule.
3. Determine whether the modification of a contract is enforceable under the UCC rule.
4. Distinguish between modification and accord and satisfaction.
5. Distinguish between an executory accord and a substituted contract.
6. Distinguish between a liquidated debt and an unliquidated debt.
7. Apply the elements of UCC § 3-311 to a fact situation involving payment by check to determine whether an accord and satisfaction was reached.