When a contract is modified, a traditional rule often requires new consideration for the modification to be enforceable. Which statement is true?

• A. Modifications require new consideration to be enforceable.
• B. Modifications never require new consideration.
• C. Modifications require new consideration only for real estate contracts.
• D. Modifications require only mutual agreement, regardless of consideration.

Answer: (A)

Under traditional common-law contract doctrine, altering the terms of an existing agreement creates a new promise that must be supported by new consideration to be enforceable. In other words, there must be something of value exchanged specifically for the modification; simply agreeing to modify without giving the other party fresh consideration leaves the modification unenforceable because there isn’t a new bargain. This is why a modification to pay more for extra work, for example, is enforceable only if the extra payment counts as new consideration.

Note that the old duty to perform under the original contract isn’t enough by itself. The traditional rule isn’t saying mutual agreement alone suffices without consideration, and it isn’t limited to real estate. The major modern exception is under the UCC for contracts in the sale of goods, where modifications can be enforceable without new consideration if made in good faith. Still, for traditional non-UCC contracts, modifications require new consideration.