rule. New objections raised in the nineteenth century emanated from the consensual theory-inspired argument that the rule barred the enforcement of many voluntary consensual modifications in the process of barring the targeted coerced ones. A few state courts and legislaturesrocess of barring responded by outright rejection of the rule. Simultaneously, common law courts, now fused with equity, were developing the policing mechanisms of economic duress, unconscionability and good faith, which were more discriminating than the absolutist consideration bar in surgically thwarting abusive bargaining behavior. American courts of law and equity did develop equitable exceptions to the rule when unanticipated circumstances arose subsequent to the original agreement or when reliance on a modification agreement occurred. These scattered reforms notwithstanding, the preexisting duty rule was reaffirmed in England and in most American jurisdictions during the latter part of the nineteenth century.

JUSTIFICATIONS FOR RULE

Arguments in support of the rule included more than simply the old books justification in Foakes v. Beer. One justification flows naturally from the rule’s long standing, however, since it was argued that the consistent application of this static rule afforded certainty for business planners when modifications were proposed. This was consistent with a strain of doctrine developed earlier which also reinforced predictable contract rights, e.g., parole evidence rule and the strict contract principle. The ruling in Foakes v. Beer fit the times in providing a formalistic defense of vested property rights acquired through deals negotiated by well informed bargainers; furthermore, it limited an entrepreneur’s exposure to damages as a result of maneuvering done to cajole performance by a contractor now reluctant to complete a losing contract.

In justifying the rule from the perspective of the doctrinal demands of consideration, the application of that doctrine to an accord fact situation generated the conclusions that the promisor received no benefit, since he would receive nothing that he didn’t already have a right to, and that the promisee suffered no detriment since he was already obligated under the original agreement. The earlier discussed assumpsit case Richards v. Bartlett (1584)46 essentially made this analysis, and this remained the doctrinal view not only in England in Foakes v. Beer (1884) but also in contemporaneous American decisions.47

Advocates of the preexisting duty rule’s applications to accords could point to abuses averted, such as unconscionability, coercion, bad faith, undue influence and deception employed to force an accord; for example, the perpetrator might employ such behavior to threaten cessation of performance unless a modification was agreed to.48 Proponents of the rule

also argued that the party with the bargaining leverage to abuse was not always the creditor since creditors could likewise find themselves in the weaker economic position, and further, that the preexisting duty rule afforded no incentive to stronger parties, like insurance or railway companies, to attempt unfair settlements since all modifications, including a pressured reduction, would be unenforceable.49

A special area of concern over coercion in modification agreements involved existing duties of employees and contractors, both public50 and private, where advantage might otherwise be taken when the employer or owner was vulnerable. The decisions vacillated between policy and lack of consideration as the ground for rejecting employees’ claims. The early cases involved seamen promised additional wages during a voyage to perform extra work during a storm or after desertions. These cases have a close parallel to accord agreements; in an accord the modified agreement is for the debtor to pay less, and in a wage case the modified agreement is for the employer to pay more. The lumping together of these two types of modification agreements in Foakes v. Beer caused the analysis of these employment and contractor cases to be subsumed under the considera- tion-based accord rule in Pinnel’s Case.51 In Harris v. Watson (1791), Lord Kenyon refused the additional seamen’s wages for extra work done while a ship was in danger ‘‘on a principle of policy, for if sailors were in times of danger entitled to insist on an extra charge,’’ it would ‘‘materially affect the navigation of the kingdom.’’52 In oft-cited Stilk v. Myrick (1809), Lord Ellenborough doubted Lord Kenyon’s policy ground, saying, ‘‘the agreement is void for want of consideration’’53 since they had a duty under the original contract to do all they could to assist after others deserted.

The pendulum then briefly swung back to policy logic in Harris v. Carter (1854) in a seaman’s wages case when Lord Campbell declared: ‘‘I cannot agree with Lord Ellenborough . . . in discarding the ground of public policy on which Lord Kenyon relied . . . for I think it could be most mischievous to commerce.’’54 The seaman’s counsel said there was consideration for the agreement for extra wages because of his extra labor as a result of the desertions, but Campbell said, had the plaintiff been discharged and then entered into a ‘‘fresh contract,’’ only then would there be consideration.55 It may have been preferable for these employment cases to be handled under the public policy ground of averting economic duress; however, after consideration logic won out after Foakes v. Beer, these cases were eventually placed under the rule in Pinnel’s Case. Despite the fact that only one of the holdings in the above three seamen’s cases was based primarily on consideration, and none of the three cited Pinnel’s Case, all three were cited in Foakes v. Beer as supportive of the rule in Pinnel’s Case.56 Thus, both increases and decreases in original contract obligations were becoming viewed as governed by a single doctrine to avert coerced modifications now referred to as the preexisting duty rule.

Chapter 3

Judicial Reform of

Preexisting Duty Rule

During the generation after Foakes v. Beer (1884), many American judges raised objections to the ruling. In fact, objections to the rule in Pinnel’s Case appeared in case reports from early in the nineteenth century onward.1 In the 1840 Massachusetts decision Brooks v. White,2 the court stated:

[The preexisting duty] rule, which obviously may be urged in violation of good faith, is not to be extended beyond its precise import; and whenever a technical reason for its application does not exist, the rule itself is not to be applied . . . [to] any new consideration . . . which might raise a technical legal consideration.

In addition to Blackburn’s misgivings in Foakes v. Beer itself, Lord Fitzgerald had lamented that ‘‘some of the distinctions which have been engrafted on it, make the law absurd.’’3 American jurisdictions continued to apply the rule at the end of the nineteenth century, but not without objection. A representative case is an 1899 Washington judicial opinion imparting its dissatisfaction with the rule and its inclination to restrict it because: ‘‘It is certainly not in accord with ethics and ought not to be in accord with the rule of law.’’4 The court said it might be better to change the rule but then didn’t bother because it was able to find a modicum of consideration lurking in the facts. It is remarkable how the rule held on so tenaciously in the face of widespread opposition. Explanations for the vitality of the rule naturally begin with the aged and sanctified status of the doctrine of consideration. Support for the predictability of knowing what one’s rights and duties were under the original contract cannot be ignored. Another force to take into account was the formalist urge of midto late nineteenth century commercial lawyers and judges to contend with