Pre-existing Duty Rule

Have you ever made a deal with someone for a set amount only later to modify the deal for a larger amount? Sometimes situations like this lead to problems over which agreement is enforceable; the first one for less or the modified one for more? As you know, an enforceable contract must be supported by consideration. A rule called the pre-existing duty rule helps us to determine which agreement is supported by consideration and therefore enforceable.

Did I ever tell you guys about the time my contracts professor sued our study group?

Well it was after first semester of 1L. A bunch of us from my study group decided to buy a local organic burger joint. Surprisingly our Contracts professor, Professor Hiddenball, was down on his luck due to declining text book sales and was looking for work over winter break. Overwhelmed with Christmas spirit we hired our professor and agreed to a living wage of $21 per hour.

Holiday Business was booming and our sales were driving our local competitor out of business. Never one to pass on an opportunity professor hidden ball gave us a weeks notice that he’d be leaving to work for our competitor who had offered him double what we were paying. Desperate to keep our newly acquired talent we offered to match whatever the competitor was offering. Feeling a little hustled, on pay day we decided to only pay Professor Hiddenball what we had originally agreed, $21per hour.

When the case was taken before Judge Judy, it turns out that the pre-existing duty rule was in our favor. The judge found that we were under no enforceable obligation to pay the additional hourly wage because our promise to pay more money for the professors same service of performance lacked consideration. You see, Professor Hiddenball received a new promise from us for double his wages but in exchange or in consideration he didn’t give us anything new; he merely kept providing the same performance but for more pay.

But not so fast, there is a counterargument that you ought to keep in mind. Had the professor been promised additional pay in exchange for his promise to take on additional tasks at work then there would have been valid consideration and the promise for increased pay would have been enforceable. You want to watch out for situations like this in cases, lecture and on exams.

Now that you’ve got the big picture, read your cases, listen in lecture and get practice analyzing the pre-existing duty rule with practice problems.