FLK1 · Multiple-choice practice

FLK1 Contract Law — Question 28

Question

Alice and Bob enter into a written contract for Bob to deliver 100 boxes of goods to Alice’s warehouse by a specified date in exchange for £10,000. After signing the contract, Alice realizes that she actually needs 150 boxes of goods to fulfil her customer orders. Alice contacts Bob and asks if he would be willing to deliver an additional 50 boxes of goods for an extra £2,000. Bob agrees in writing to Alice’s request. However, after delivering the additional 50 boxes of goods, Bob demands an extra £3,000 from Alice, claiming that the increased workload was more burdensome than anticipated. Alice refuses to pay the additional amount, arguing that they already agreed on the price of £2,000 for the additional boxes. What legal principle governs the modification of the contract in this situation?

The parol evidence rule, which prohibits parties from introducing oral evidence to modify the terms of a written contract.
The doctrine of consideration, which requires parties to exchange something of value to modify an existing contract.
The doctrine of promissory estoppel, which prevents parties from going back on their promises when the other party relies on the promise.
The rule against penalties, which invalidates contractual provisions that impose excessive or unconscionable penalties for breach of contract.
The Statute of Frauds, which requires certain types of contracts to be in writing and signed by the parties to be enforceable.

Answer and explanation

Correct answer: B. The doctrine of consideration, which requires parties to exchange something of value to modify an existing contract.

In this scenario, Alice and Bob modified their existing contract to increase the quantity of goods to be delivered by Bob in exchange for an additional payment of £2,000. Under the doctrine of consideration, a modification to an existing contract is valid and enforceable only if there is new consideration exchanged between the parties. Consideration refers to something of value given or promised by each party to the other, such as goods, services, or money. In this case, Alice’s promise to pay an additional £2,000 in exchange for the delivery of 50 extra boxes of goods constitutes consideration. Therefore, the modification is valid and enforceable, Alice won’t have to pay more than the agreed price for the additional boxes.

Original newsletter explanation ↗

Continue in the test bank for scoring, feedback, progress tracking and timed mini mocks.