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.
In some states it is provided expressly by statute that a written contract can be only modified by a subsequent written contract or by an executed oral agreement.1 Under such a statute an executory oral agreement, even if otherwise valid, can not operate to modify a prior written contract.2 Under such a statute, however, a prior written contract may be discharged or modified by a subsequent executory contract which has been performed in full.3
1 See Sec. 2485.
2 Georgia. Rome industrial Ins. Go. v. Eldson, 138 Ga. 592, 75 S. E. 657.
Iowa. Chicago Lumber & Coal Co. v. Garmer. 132 Ia. 282, 109 N. W. 780,
New York. Quinlan' v. Providence Washington Ins. Co., 133 N. Y. 356, 28 Am. St. Rep. 645, 31 N. E. 31.
Ohio. Baltimore & Ohio Ry. v. Jolly, 71 Ohio St. 92, 72 N. E. 888.
Wisconsin. Carey v. German-American Ins. Co., 84 Wis. 80, 36 Am. St. Rep. 907, 20 L. R. A. 267, 54 N. W. 18.
A provision in a written contract to the effect that such contract can not be modified except in writing can not be waived by an agent unless such agent is shown to have had authority to bind his principal by an oral contract. Baltimore & Ohio Ry. v. Jolly, 71 O. S. 92, 72 N. E. 888.
3 Chicago Lumber & Coal Co. v. Garmer, 132 Ia. 282, 109 N. W. 780; Baltimore & Ohio Ry. v. Jolly, 71 Ohio
St. 92, 92 N. E. 888; Gibbs v. School District, 195 Pa. St. 396, 46 Atl. 91.
4 Rome Industrial Ins. Co. v. Eldson, 138 Ga. 592, 76 S. E. 657; Walsh v. Hartford Fire Ins. Co., 73 N. Y. 5; Quinlan v. Providence-Washington Ins. Co., 133 N. Y. 356, 28 Am. St. Rep. 645, 31 N. E. 31; Morgan v. American Central Ins. Co., 80 W. Va. 1, L. R. A. 1917D, 1049, 92 S. E. 84; Carey v. German-American Ins. Co., 84 Wis. 80, 36 Am. St. Rep. 907, 20 L. R. A. 267, 54 N:W. 18.
5 Industrial Mutual Indemnity Co. v. Thompson, 83 Ark. 576, 10 L. R. A. (N.S.) 1064, 104 S. W. 200; Viele v. Germania Ins. Co., 26 Ia. 9, 96 Am. Dec. 83; American Ins. Co. v. GaHatin, 48 Wis. 36, 3 N. W. 772.
6 Industrial Mutual Indemnity Co. v. Thompson, 83 Ark. 575, 10 L. R. A. (N.S.) 1064, 104 S. W. 200; Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129, 1 L. R. A. 223, 39 N. W. 76.
Under such statutes there is a conflict of authority as to what constitutes an executed contract. An agreement between an insurance company and a policy-holder, after a loss, fixing the amount of the liability of the company, is not a "modification"' of the policy within the meaning of the statute, forbidding executory oral modifications of written contracts.4 On the other hand, a written contract for sinking a well, provided that if four and a half inch piping were used, the price should be fifteen hundred dollars; but if three-inch piping had to be used, the price should be nine hundred and fifty dollars. Subsequently, after four and a half inch piping could be and was used for the greater part of the distance, the parties agreed orally that three and a half inch piping should be used for the rest of the distance and that the price should be fifteen hundred dollars. Pipe of this size was put in, and more than nine hundred and fifty dollars was paid. It was held that the contractor could not recover the balance, as the contract was still executory.5 If a written contract consists of a note which is given for an automobile and a chattel mortgage on such automobile, such written contract can not be modified by a subsequent agreement that the seller should pay for the maintenance of the automobile, and for the living expenses of the buyer, and that in consideration thereof the buyer would use the automobile for hire, and that he would turn over to the seller all the money received for the use thereof until the balance of the purchase money should be paid, as long as the subsequent contract was not performed in full.6
1 Pearsall v. Henry, 163 Cal. 314, 95 Pac 154 [judgment affirmed on rehearing, Pearsall) v. Henry, 153 Cal. 314, 95 Pac. 159; Quinlivan v. Dennstedt Land Co., - N. D. - , 168 N. W. 51; Levin v. Hunt, - Okla. - , 172 Pac. 940 (obiter); Clark v. Sallaska, - Okla. - 4 A. L. R. 746, 174 Pac. 505; Emerson-Brantingham Implement Co. v. Ware, - Okla. - , 174 Pac. 1066.
2 United States. Northern Wyoming Land Co. v. Butler, 252 Fed. 971.
California. Erenberg v. Peters, 66 Cal. 114, 4 Pac. 1091; Benson v. Shot-well, 103 Cal. 163, 37 Pac. 147; Thompson v. Garner, 104 Cal. 108, 45 Am. St. Rep. 81, 37 Pac. 900.
Montana. Kinsman v. Stanhope, 50 Mont. 41, L. R. A. 1916C, 443, 144 Pac. 1083.
North Dakota. Reeves v. Bruening, 13 N. D. 157, 100 X. W. 241; Annis v. Burnham, 15 N. D. 377. 108 X. W. 549;
Quinlivan v. Dennstedt Land Co., - X. D. - , 168 N. W. 51.
Oklahoma. Emerson-Brantingham Implement Co. v. Ware, - Okla. - . 174 Pac. 1066.
South Dakota. Mettel v. Gales, 12 S. D. 632, 82 N. W. 181.
3 Pearsall v. Henry, 153 Cal. 314, 95 Pac. 154 [judgment affirmed on rehearing, Pearsall v. Henry, 153 Cal. 314, 95 Pac. 1591; Reeves v. Bruening, 15 N. D. 157, 100 X. W. 241.
4 Stockton, etc., Works v. Ins. Co., 121 Cal. 167, 53 Pac. 665. The court also put their ground of decision in this case upon the fact that the new agreement was in part performance, since the insured had furnished proofs of loss under the contract.
If the statute provides that a written contract can not be altered by a subsequent oral executory contract, such statute is held to have no application to a subsequent contract which provides for rescinding the original contract for voluntary agreement, and by substituting therefor a new oral agreement.7