Contract Modification, Intoxication, and Consideration in Law

Contract Modification: Enforcing a Price Change

This scenario involves a buyer, Tabor, and a seller, Martin. The two enter into a contract to deliver 50 file cabinets at $40 per cabinet in five equal installments — 10 cabinets per delivery for $400. After two deliveries, Martin informs Tabor that inflation has caused costs to increase and that he can only deliver the remaining 30 cabinets if Tabor pays $50 per cabinet. Tabor agrees in writing.

Whether Martin can legally collect the additional fees depends on the wording of the initial contract and whether Tabor's written agreement incorporates the new price into the contract, or whether Martin is in breach of the original contract and Tabor only agreed to the new price to ensure delivery of the goods he needed. If the original contract contains no price-adjustment clause, Martin cannot legally force Tabor to pay anything beyond the originally agreed price. If Martin refuses to deliver at the original price, Tabor may sue Martin for breach of contract (Contract Obligations, 2010).

Intoxication as a Defense Against Contract Validity

In this scenario, Kira had several drinks one night and sold Charlotte a diamond necklace at considerably below its market value. The next day, Kira offered Charlotte back the $100 she had received and asked for the return of the necklace. Charlotte refused. Kira argued that she was intoxicated at the time of the transaction and that the contract was therefore invalid.

Contracts are generally valid unless the intoxicated party can prove that they were so impaired as to be unaware of the legal consequences of entering into any contract. Without knowing whether Kira was able to drive home, how severely intoxicated she was, or other surrounding circumstances, the issue comes down to her capacity to understand the contract. Most legal scholars note that courts typically hold intoxicated individuals responsible for their actions. However, a court could also rule that Charlotte took advantage of Kira's impaired state, given the nature of the price — thousands of dollars in value exchanged for only $100 — which a reasonable person under normal circumstances would not likely agree to (Read This, 2012; Who Lacks, 2011).

Consideration and Promissory Estoppel in Verbal Agreements

In this scenario, Lewis is a race car driver whose friend Tuan verbally promised to pay him $3,000 if he won a race. Lewis won, but Tuan refused to pay, arguing that he had received no consideration for the verbal contract. Lewis sued Tuan, claiming that his agreement to participate in the race constituted sufficient consideration.

The doctrine of promissory estoppel supports Lewis's position, implying that he was justified in relying on Tuan's promise because it was made in exchange for his participation in the race. Consideration is understood as a promise to do something in return for payment — for example, agreeing to paint a house in exchange for $500. In this case, the consideration was Lewis's participation in the racing event. Since Lewis won, he is owed the $3,000. Even had he lost, he still would have fulfilled his part of the agreement by participating; in that event, Tuan simply would not have been obligated to pay (Introduction to Contracts and Consideration, 2012). The legal doctrine of consideration therefore supports Lewis's claim that Tuan's promise was enforceable.