Pre-Existing Duty Rule Contracts

The pre-existing duty rule is a concept in contract law that establishes that pre-existing duties cannot be considered valid consideration in a contract. In other words, if a party is already obligated to do something and simply agrees to do so again, this cannot be used as new consideration to create a binding contract. This principle is important to understand, especially in cases where parties may try to use it to their advantage. In this article, we will explore pre-existing duty rule contracts and what they mean in terms of legal agreements.

What is a Pre-Existing Duty?

In contracts, a pre-existing duty refers to the obligation that a party is already bound to by law or by an existing agreement. This obligation can arise from various sources, including a prior contract, a legal duty, or even a moral obligation. For example, if a contractor agrees to build a house for a homeowner, they are already bound by a pre-existing duty to perform the work they promised to do.

The Pre-Existing Duty Rule

The pre-existing duty rule states that the performance of a pre-existing duty cannot be used as new consideration in a contract. This principle helps ensure that people cannot be forced to do something that they are already obligated to do. For example, if our contractor agrees to build the house he was already obligated to build, he cannot ask for additional payment or consideration to do so.

Exceptions to the Pre-Existing Duty Rule

There are some important exceptions to the pre-existing duty rule, which can affect how contracts are formed and enforced. For instance, if the parties agree to modify an existing contract to add new terms or provisions, this can be considered new consideration and may be enforceable. Similarly, if there is a change in circumstances that affects the original agreement, a new contract may be created that takes into account these changes.

Another exception to the pre-existing duty rule is the doctrine of unforeseeable circumstances. This means that if there is a significant change in the circumstances surrounding the contract that was unforeseeable at the time of the agreement, the parties may be able to negotiate new terms and conditions that are enforceable.

Conclusion

Understanding pre-existing duty rule contracts is important for both individuals and businesses that engage in contractual agreements. By preventing parties from creating fraudulent or coercive agreements, the pre-existing duty rule helps ensure fair and equal transactions. However, it is important to be aware of exceptions to this rule, as these can provide an opportunity for parties to renegotiate contracts. As always, consulting with a legal expert can help clarify any questions or concerns about contract law and the pre-existing duty rule.