Defendant contended that he was obligated to pay only the lower maximum fixed by the October 17 agreement. Decision?

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Defendant contended that he was obligated to pay only the lower maximum fixed by the October 17 agreement. Decision?

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The parties entered into an oral contract in June, under which plaintiff agreed to construct a building for defendant on a time and materials basis, at a maximum cost of $56,146, plus sales tax and extras ordered by defendant. When the building was 90 percent completed, defendant told plaintiff he was unhappy with the whole job as “the thing just wasn’t being run right.” The parties then on October 17 signed a written agreement lowering the maximum cost to $52,000 plus sales tax. Plaintiff thereafter completed the building at a cost of $64,155. The maximum under the June oral agreement, plus extras and sales tax, totaled $61,040. Defendant contended that he was obligated to pay only the lower maximum fixed by the October 17 agreement. Decision?

Explanation & AnswerSolution by a verified expert

Explanation

In this case, the terms of contract have been modified on October 17, but the modified contracts cannot be considered binding as it lacks consideration. The oral contact made in June can be considered binding because of adequate consideration.
The oral agreement obligates one party to construct the building and the other party to pay an amount of $56,146 plus extra sales tax for it. The written agreement also obligates one party to construct the building and the other party to pay an amount of $52,000 plus sales taxfor it, which is less than the former option.
For a promise to be binding, it must be supported with adequate consideration. For this reason, oral agreement can be considered valid in this cas as it is supported by adequate consideration.

Sample Response

The decision here can be given to support the plaintiff as the new written agreement lacksconsideration. As a result, the old oral contract can be considered binding as itprovides sufficient consideration to the plaintiff for the work to be performed.

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