This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The courts are not, however, in accord upon this question, elementary as it might seem. In some jurisdictions, A's promise to B to perform a prior valid contract between A and B, is said to be sufficient consideration for a promise made by B to A to induce such performance.1
29Weed v. Spears, 193 N. Y. 289, 86 N. E. 10.
30 Easterly v. Jackson, 29 Mont. 496, 75 Pac. 357.
31 Carolina Hardware Co. v. Raleigh Banking & Trust Co., 169 N. Car. 744, 86 S. E. 706.
32 Carolina Hardware Co. v. Raleigh Banking & Trust Co., 169 N. Car. 744, 86 S. E. 706.
1 United States. Domenico v. Pack-ers' Association, 112 Fed. 554.
Alabama. Stoudenmeier v. Williamson, 29 Ala. 556; Thomason v. Dill, 30 Ala. 444.
Colorado. Doherty v. Doe, 18 Colo. 456, 33 Pac. 165; Hyman v. Jockey
Club Co., 9 Colo. App. 299, 48 Pac. 671.
Massachusetts. Rogers v. Rogers, 139 Mass. 440, 1 N. E. 122.
Michigan. Moore v. Locomotive Works, 14 Mich. 266. Compare Widi-man v. Brown, 83 Mich, 241, 47 N. W. 231; where after full performance by a builder, payment was refused unless an additional coat of varnish should be put on, and a promise to do so by the builder was held not to be a consideration. Goebel v. Linn, 47 Mich. 489, 41 Am. Rep. 723, 11 N. W. 284; Conkling v. Tuttle, 52 Mich. 630, 18 N. W. 391; Blodgett v. Foster, 120 Mich. 392, 79 N. W. 625; Scanlon v. North-wood, 147 Mich. 139, 110 N. W. 493.
The theory of some of these last cited cases is that the original contract was in part executory, and that the parties might rescind, the waiver of their mutual rights being a consideration, and that there would then be no objection to their making a new contract which might cover the same subject-matter as the original contract. As stated abstractly this is no doubt true. The objection to applying the doctrine to these cases is that it assumes facts which do not exist; for in almost every case the transaction was not a voluntary rescission followed by a subsequent independent new contract, but simply a promise to pay additional compensation for performance of the old contract, often made after rights were fixed by breach. Thus a promise to reduce rent after the tenant had taken possession and refused to pay the rent stipulated;2 a promise to repair, made after a lease was executed;3 a promise to pay a certain amount extra to induce the adversary party to deliver lumber,4 or iron,5 or ice,6 or a locomotive,7 or plated ware,8 have each been explained as new contracts.
If one party to a contract refuses performance except on terms more favorable to him than those of the original contract, it is the duty of the adversary party to do what a reasonable and prudent man should do to mitigate damages;9 and if the readiest and most convenient method of mitigating such damages is to induce the adversary party to perform upon more favorable terms, it would seem that the party who attempts to mitigate damages in this way ought not to be regarded as giving up his right of action upon the original contract. This view has been adopted in some jurisdictions.10 If A and B have entered into a contract whereby A ha3 agreed to sell certain goods to B for a certain price, and B refuses to perform, A may treat such refusal as a breach, sell such goods to B at a lower price, and maintain an action against B for the difference between the contract price and the price at which such goods were resold.11 Under this theory, however, the party who is not in default does not surrender his right of action against the party who is in default by making such new contract, in order to mitigate damages.
2Doherty v. Doe, 18 Colo. 456, 33 Pac. 165; Hyman v. Club, 9 Colo. App. 299, 48 Pac. 671. For a case taking the opposite view see Goldsborough v. Gable, 140 111. 269, 15 L. R. A. 294, 29 N. E. 722. An agreement to reduce rent when the tenant holds over was held valid in Moore v. Harter, 67 0. S. 250, 65 N. E. 883.
3Conkling v. Tuttle, 52 Mich. 630, 18 N. W. 391. In this case the time was changed, and a consideration may be found therein.
4Blodgett v. Poster, 120 Mich. 392, 79 N. W. 625. In this case the promise for extra compensation was as follows: "In consideration of the faithful performance of the above and foregoing contract by the parties of the first part, which they agree to do, it is hereby agreed by the parties that the prices for lumber shall be one dollar per M. higher than the prices named in the contract."
5 Agel v. Mfg. Co., 77 Vt 13, 58 Atl. 792.
6 Goebel v. Linn, 47 Mich. 489, 41 Am. Rep. 723, 11 N. W. 284.
7 Moore v. Locomotive Works, 14 Mich. 266.
8 Rogers v. Rogers, 139 Mass. 440, 1 N. E. 122.
9See ch. LXXXVII.
In some cases it is said that no consideration other than the mutual agreement of the parties is necessary to support the contract of rescission, even if the new contract is the same as the original contract, with the exception of one term.12 The recent cases do not attempt to give a reason for this rule, resting it solely on authority.13 In some jurisdictions in which this view is still held, the courts have vacillated between the minority view and the majority view. Some of the early cases upon which this rule rests,14 have been, in effect, overruled by later cases.15 In Michigan it was held in a number of cases that B's performance of the original contract was consideration for A's promise to induce him to perform.16 Subsequently it was held that A's promise to do additional work under his contract, in order to induce B to make the payments provided for by such contract, was without consideration.17 In later cases, however, it has been held in Michigan that B's performance is a consideration for A's promise.18 Where B agreed to do certain work for certain specified compensation, and B subsequently refused to perform when he found that he would lose money under such contract, it was held that B's continuing performance was consideration for A's promise to pay him such further sum as would be necessary to enable B to pay his workmen for such work at the usual rate of wages.19 In Massachusetts it has been decided in a number of casefe that B's performance is a consideration for A's promise. If A has agreed to do certain work for B, and,then refuses to perform, B's promise to pay an additional amount to induce A to perform is said to operate as a rescission of the original contract, and to be supported by sufficient consideration,20 although in recent cases no reason for such result has been given.21 Massachusetts has refused to apply this rule recently in a case,22 which, in its material facts, was like the earlier cases23 in which it was applied. B had agreed to prepare a sportsman's guide for A, a railway company, for an agreed compensation, and subsequently B demanded partial payment in advance, and to induce B to continue performance A promised to make certain advances. It was held that B's performance of the original contract was not a consideration for A's promise to make such advances, and that A's refusal to make advances after promising so to do did not discharge B from his duty to perform the original contract.24
10 Arkansas & Texas Grain Co. v. Young & Fresch Gram Co., 79 Ark. 603, 116 Am. St. Rep. 99, 96 S. W. 142.
11 Arkansas & Texas Grain Co. v. Young, etc., Co., 79 Ark. 603, 116 Am. St. Rep. 99, 96 S. W. 142.
12 Stoudenmeier v. Williamson, 29 Ala. 558; Thomason v. Dill, 30 Ala. 444.
13Doherty v. Doe, 18 Colo. 456, 33 Pac. 165; Blodgett v. Foster, 120 Mich. 392, 79 N. W. 625; Scanlon v. North-wood, 147 Mich. 139, 110 N. W. 493.
14Munroe v. Perkins, 26 Mass. (9 Pick) 298; Lattimore v. Harsen, 14 Johns. (N. Y.) 330.
15 Parrot v. Mexican Central Ry. Co., 207 Mass. 184, 93 N. E. 590; Vander-bilt v. Schreyer, 91 N. Y. 392; Arend v. Smith, 151 N. Y. 502, 45 N. E. 872.
16 Moore v. Detroit Locomotive Works, 14 Mich. 266; Goebel v. Linn, 47 Mich. 489, 41 Am. Rep. 723, 11 N. W. 284; Conkling v. Tuttle, 52 Mich. 630, 18 N. W. 391.
17Widiraan v. Brown, 83 Mich. 241, 47 N. W. 231.
18 Blodgett v. Foster, 120 Mich. 392, 79 N. W. 625; Scanlon v. Northwood, 147 Mich. 139, 110 N. W. 493.