Business Law

student A

Issue: Tabor made a contract with Martin who has agreed to deliver fifty file cabinets at $40 each in five installments. Martin already delivered two installments but found out he was losing money, so he told Tabor that he will deliver the last three installments only if Tabor agrees to pay ten dollars extra for each cabinet. Tabor agrees to this in writing, but can Martin legally collect the extra money for the file cabinets by Tabor?

Rule: In order for a contract to be valid and legal there are a few contractual considerations to adhere to. One of these contractual considerations are preexisting duties. Preexisting duties are duties that have already been agreed upon. Martin has agreed to deliver fifty file cabinets at a specific price and both Tabor and Martin have made a contract to do so. In this instance Martin has preexisting duties to deliver the fifty file cabinets because he has already agreed to it in contract whether Tabor has agreed to the extra payment or not.  

Analysis: According to the preexisting contract consideration Martin has already made a contract with Tabor. Because of this he cannot make another contract with Tabor for the same duty of delivering the file cabinets since the original contract already states he will deliver them at a certain price. However, there is a chance that the court can see this extra contract being made because of an unforeseen difficulty which is the inflation. Because the inflation occurred during the time he was delivering the file cabinets it can be quite possible Martin will be able to collect.

Conclusion: It can go both ways in this circumstance. Firstly, due to preexisting duties considerations Martin would not be able to collect the money because he cannot make another contract for the duty if there is already a contract made for it. However, if the inflation is seen to the court as an unforeseen difficulty then Martin can collect the extra money from the delivery for  the rest of the file cabinets.

Other student answer

Issue:

Martin informs Tabor that due to inflation, he is losing money and promises to deliver the rest of the cabinets only if Tabor will pay $50 per cabinet.  The original agreement was $40 per cabinet.  Can Martin legally collect the additional $100 on delivery to Tabor of the next installment of ten cabinets?

Rule:

Under the Preexisting Duty, performance of an act by which a party is already contractually bound to perform does not constitute valid consideration for a new promise, Martin and Tabor already had a preexisting contract. 

Application:

Under the Preexisting Duty, Martin already had a preexisting contract to deliver cabinets to Tabor for $40 per cabinet.  Due to this already existing contract Martin should have anticipated the inflation rates prior to making and delivering the products, and before entering a contract with Tabor.  That preexisting contract has consideration, and the new contract does not.  Martin telling Tabor he will not deliver the products unless the extra money is paid is not supported by legally sufficient consideration.  

Conclusion:

Martin should have anticipated the inflation rates and included it in the original contract with Tabor.  It is unfair to tell Tabor that the good will not be delivered unless the extra money is given.  Tabor did agree to the up charge, but he was stuck.  Tabor had already received other cabinets, and probably did not have the time to find another maker for them.  The new contract is unenforceable because Martin already had a preexisting contract to deliver the cabinets for a certain price. Martin can not legally collect the additional $100 for the remaining cabinets.