Mutual Discharge and Substituted Agreement - Additional Compensation In the case of a contract which is wholly executory, - that is, a contract in which there is something to be done on both sides, - it can, as we shall see in treating of discharge of contract, be discharged by mutual consent. The acquittance of each from the other's claims in such a case is the consideration of each to waive his own.12 If parties can so discharge the contract, it follows that they may substitute a new contract in its place. Suppose, however, that one of the parties to a contract refuses to perform, because he finds that he must suffer a loss by performance; and suppose the other party wishes performance, and requires it to prevent serious loss. Would a promise, made by him in order to induce the other to perform, of more than he was liable to pay or do under the original contract, be binding, or would it be void, on the ground that the only consideration for it is the promise by the other to perform the original contract, - a thing which he was already bound to do? The courts differ in their answers to this question.13
9 See Lucas v. Allen, 80 Ky. 681; Hatch v. Mann, 15 Wend. (N. Y.) 45. Since a witness, however, cannot be compelled to attend in another state, a party's promise of extra compensation to induce him to attend is binding. Armstrong v. Prentice, 86 Wis. 210, 56 N. W. 742. See "Contracts," Dec. Dig. (Key-No.) § 75; Cent. Dig. §§ 273-285.
10 England v. Davidson, 11 Adol. & E. 836; McCandless v. Steel Co., 152 Pa. 139, 25 Atl. 579; Studley v. Ballard, 169 Mass. 295, 47 N. E. 1000, 61 Am. St. Rep. 286. See "Contracts" Dec. Dig. (Key-No.) § 75; Cent. Dig. §§ 27S-2S5.
11 Robinson v. Jewett, 116 N. Y. 40, 22 N. E. 224. See "Contracts" Dec. Dig. (Key-No.) § 75; Cent. Dig. §§ 273-285.
12 Post, p. 526. 13 See infra, notes 14-17.
Some courts hold, in accordance with the general rule, that the promise of extra compensation is without consideration and void.14 In some of these jurisdictions, however, an exception has been recognized where the new promise is made on account of unforeseen and substantial difficulties in the performance of the contract.15 In the language of the leading case recognizing the exception,18 "where the party refusing to complete his contract does so by reason of some unforeseen and substantial difficulties in the performance of the contract, which were not known or anticipated by the parties when the contract was entered into, and which cast upon him an additional burden not contemplated by the parties, and the opposite party promises him extra pay for benefits if he will complete his contract, and he so promises, the promise to pay is supported by a valid consideration. In such a case the natural inference arising from the transaction, if unmodified by any equitable considerations, is rebutted, and the presumption arises that by the voluntary and mutual promises of the parties their respective rights and obligations under the original contract are waived, and those of the new or modified contract substituted for them."
Other courts hold outright that, even where there is nothing more than refusal on the part of one party to perform, a new agreement, in which the other, to induce him not to break, but to go on with, his contract, promises to pay him a larger sum than originally promised, at least if it is in substitution of the original contract, is binding.17 Some of these courts base their decision
14 KING v. RAILWAY CO., 61 Minn. 482, 63 N. W. 1105, Throckmorton Cas. Contracts, 115; Vanderbilt v. Schreyer, 91 N. Y. 392; Reynolds v. Nugent, 25 Ind. 328; Erb v. Brown, 69 Pa. 216; Ayres v. Railway Co., 52 Iowa, 478, 3 N. W. 522; McCarthy v. Association, 61 Iowa, 287, 16 N. W. 114; Cobb v. Cowdery, 40 Vt. 25, 94 Am. Dec. 370; Keith v. Miles, 39 Miss. 442, 77 Am. Dec. 685; Gaar, Scott & Co. v. Green, 6 N. D. 48, 68 N. W. 318; Jones v. Ris-ley, 91 Tex. 1, 32 S. W. 1027; Main St. & A. P. R. Co. v. Traction Co., 129 Cal 301, 61 Pac. 937; Westcott v. Mitchell, 95 Me. 377, 50 Atl. 21; Alaska Packers' Ass'n v. Domenico, 117 Fed. 99, 54 C. C. A. 485; Lingenfelder v. Brewing Co., 103 Mo. 578, 15 S. W. 844. See "Contracts," Dec. Dig. (Key-No.) §§ 2S7, 244; Cent. Dig. §§ 1119-1122, 1128.
15 KING v. RAILWAY CO., 61 Minn. 482, 63 N. W. 1105, Throckmorton Cas. Contracts, 115; Linz v. Schuck, 106 Md. 220, 67 Atl. 286, 11 L. R. A. (N. S.) 789 and note, 124 Am. St. Rep. 481, 14 Ann. Cas. 495 and note; Meech v. City of Buffalo, 29 N. Y. 198. See "Contracts," Dec. Dig. (Key-No.) §§ 75, 237; Cent. Dig. §§ 273-285, 1119-1122.
16 KING v. RAILWAY CO., 61 Minn. 482, 63 N. W. 1105, Throckmorton, Cas. Contracts, 115, per Start, C. J. See "Contracts," Dec. Dig. (Key-No.) §§ 75, 287; Cent. Dig. §§ 273-285, 1119-112S.
17 Munroe v. Perkins, 9 Pick. (Mass.) 298, 20 Am. Dec. 475; Rollins v. Marsh, on the ground that a person who has entered into a contract is entitled to choose between going on with it at a loss and the risk of an action by the other party for the breach. This might be a sound doctrine if a contract were, according to Mr. Justice O. W. Holmes, Jr.'s,18 conception of it, the mere taking of a risk; that is, if a party must be held to contemplate, when he gives a promise, not its performance, but the payment of damages for its breach, or performance, at his option, according as the one or the other may seem the more to his interest in the light of future developments. Such, however, does not seem the proper conception of contract. Certainly, as a rule, when a man makes a contract, he does so with the intention of performing it, and with the expectation of performance by the other party. If cannot be that a contract is nothing more than a mere gambling transaction - a mere bet on its performance. To allow a man who has promised, on a sufficient consideration, to repudiate his promise when he finds that he is to suffer loss, and force the other party to pay an additional sum in order to obtain what he is already entitled to, encourages breach of contract and breach of faith.