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Am Jur 2d - Contracts § 496

V. Modification, Extinguishment, and Renewal, B. Modification, 1. Scope and Effect, § 496 - By consent or new agreement

A modification of a contract is a change in one or more aspects of it that introduces new elements into the details or cancels some of them but leaves the general purpose and effect of the contract intact.[1] Modification of a contract normally occurs when the parties agree to alter a contractual provision or to include additional obligations, while leaving intact the overall nature and obligations of the original agreement.[2] Parties may modify or waive their rights under a contract and embed new terms.[3] Also, parties may alter any term of an existing contract by entering into a subsequent contract, and the contract, as modified, becomes a new contract between the parties, and the meaning to be given the subsequent agreements depends on the intention of the parties.[4]

Parties to a contract are not forever locked into its terms,[5] but have the right to amend their contract by mutual consent.[6] Accordingly, parties to an existing contract may, by mutual assent, modify it,[7] provided the modification does not violate the law[8] or public policy,[9] and provided that there is consideration for the new agreement or that it satisfies a statute or is made under circumstances making consideration unnecessary.[10] Furthermore, the parties to a written contract may modify, waive, or make new terms notwithstanding terms in the contract designed to hamper such freedom.[11]

A modified contract is essentially a new contract which must pass the same tests and scrutiny that apply to the initial determination of whether an enforceable agreement exists.[12] A valid modification of a contract must satisfy all the criteria essential for a valid original contract,[13] including offer, acceptance, and consideration.[14]

A modification of a contract requires the mutual assent of both,[15] or all, parties to the contract.[16] Hence, one party to a contract may not unilaterally alter its terms[17] without the assent of the other party.[18] Mutual assent is as much a requisite element in effecting a contractual modification as it is in the initial creation of a contract.[19] Furthermore, a valid contract modification requires mutual assent to the meaning and conditions of the modification and the parties must assent to the same thing in the same sense.[20] A valid modification of a contract requires a meeting of the minds of the parties,[21] which must be spelled out, either expressly or impliedly, with sufficient definiteness.[22]

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1   F.R.S. Development Co., Inc. v. American Community Bank and Trust, 2016 IL App (2d) 150157, 2016 WL 715112 (Ill. App. Ct. 2d Dist. 2016) .

2   Hildreth Consulting Engineers, P.C. v. Larry E. Knight, Inc., 801 A.2d 967 (D.C. 2002) .

3   F.R.S. Development Co., Inc. v. American Community Bank and Trust, 2016 IL App (2d) 150157, 2016 WL 715112 (Ill. App. Ct. 2d Dist. 2016) .

4   Alarmax Distributors, Inc. v. New Canaan Alarm Co., Inc., 141 Conn. App. 319, 61 A.3d 1142, 80 U.C.C. Rep. Serv. 2d 258 (2013) .
 Subsequent agreement, to be a modification and deemed part of a single contract under New York law, must do more than label itself an amendment or incorporate terms and provisions from the earlier agreement; it must alter the original terms and provisions in the first agreement. In re New York Skyline, Inc., 432 B.R. 66 (Bankr. S.D. N.Y. 2010) .
 As to subsequent or secondary agreements, see §§ 489 to 495 .

5   Urban Sites of Chicago, LLC v. Crown Castle USA, 2012 IL App (1st) 111880, 365 Ill. Dec. 876, 979 N.E.2d 480 (App. Ct. 1st Dist. 2012) .

6   A & T Siding, Inc. v. Capitol Specialty Ins. Corp., 358 Or. 32, 359 P.3d 1178 (2015) .

7   Large v. Mobile Tool Intern., Inc., 724 F.3d 766 (7th Cir. 2013) (applying Virginia law) ; Allstate Ins. Co. v. Stinebaugh, 374 Md. 631, 824 A.2d 87 (2003) .

8  Parties to a written contract are usually free to modify or terminate contracts by separate agreement; however, as is the case with the terms of the original contract, the modifications must be consistent with the law. Ayres v. Ocwen Loan Servicing, LLC, 129 F. Supp. 3d 249 (D. Md. 2015) .

9   F.R.S. Development Co., Inc. v. American Community Bank and Trust, 2016 IL App (2d) 150157, 2016 WL 715112 (Ill. App. Ct. 2d Dist. 2016) .

10   Allstate Interiors & Exteriors, Inc. v. Stonestreet Const., LLC, 907 F. Supp. 2d 216 (D.R.I. 2012) , aff'd, 730 F.3d 67 (1st Cir. 2013) .
 It is a fundamental principle of Florida contract law that a promise must be supported by consideration to be enforceable; this principle applies with equal force to the modification of a contract. Solnes v. Wallis & Wallis, P.A., 15 F. Supp. 3d 1258 (S.D. Fla. 2014) , aff'd, 606 Fed. Appx. 557 (11th Cir. 2015) .
 As to the necessity of consideration, see § 500 .

11   Lone Mountain Production Co. v. Natural Gas Pipeline Co. of America, 984 F.2d 1551 (10th Cir. 1992) (applying Utah law) ; Metzler Contracting Co. LLC v. Stephens, 774 F. Supp. 2d 1073 (D. Haw. 2011) , aff'd, 479 Fed. Appx. 783 (9th Cir. 2012) .
 Under New Hampshire law, parties to a contract cannot, even by express provision in the contract, deprive themselves of the power to alter, vary, or discharge it by subsequent agreement. In re Chicago Investments, LLC, 470 B.R. 32 (Bankr. D. Mass. 2012) .

12   Vasily v. MONY Life Ins. Co. of America, 104 F. Supp. 3d 207 (D. Conn. 2015) .

13   AIU Ins. Co. v. TIG Ins. Co., 934 F. Supp. 2d 594, 94 A.L.R.6th 735 (S.D. N.Y. 2013) , aff'd, 577 Fed. Appx. 24 (2d Cir. 2014) .
 Modification of a contract, because it is also a contract, requires all of the requisite elements of a contract. AM General LLC v. Armour, 46 N.E.3d 436 (Ind. 2015) .

14   F.R.S. Development Co., Inc. v. American Community Bank and Trust, 2016 IL App (2d) 150157, 2016 WL 715112 (Ill. App. Ct. 2d Dist. 2016) .
 A contract, either oral or written, may be modified by a subsequent agreement which is supported by legally sufficient consideration, or a substitute therefor, and meets the requirements for contract formation. Shedden v. Anadarko E. & P. Co., L.P., 136 A.3d 485 (Pa. 2016) .
 As to consideration, see § 500 .

15   Van Camp v. Van Camp, 333 Ark. 320, 969 S.W.2d 184 (1998) .

16   Cambridge Technologies, Inc. v. Argyle Industries, Inc., 146 Md. App. 415, 807 A.2d 125, 48 U.C.C. Rep. Serv. 2d 966 (2002) .
 Under Pennsylvania law, while a contract may be altered after its formation, all parties must mutually agree to the new terms and consideration must be exchanged. In re Commonwealth Renewable Energy, Inc., 540 B.R. 173 (Bankr. W.D. Pa. 2015) , stay pending appeal denied, 2016 WL 1238199 (Bankr. W.D. Pa. 2016) .

17   SCG Harbourwood, LLC v. Hanyan, 93 So. 3d 1197 (Fla. 2d DCA 2012) .
 Unilateral statements or actions, made after an agreement has been reached or added to a completed agreement, clearly do not serve to modify the original terms of the contract, especially where the other party does not have knowledge of the changes, because knowledge and assent are essential to effective modification. County of Morris v. Fauver, 153 N.J. 80, 707 A.2d 958 (1998) .
 While a waiver may be effectuated by one party, a contractual modification is the result of the bilateral action of both parties to the transaction. RBC Nice Bearings, Inc. v. SKF USA, Inc., 318 Conn. 737, 123 A.3d 417 (2015) .

18   Great American Assurance Company v. PCR Venture of Phoenix LLC, 2015 WL 10008627 (D. Ariz. 2015) .

19   AIU Ins. Co. v. TIG Ins. Co., 934 F. Supp. 2d 594, 94 A.L.R.6th 735 (S.D. N.Y. 2013) , aff'd, 577 Fed. Appx. 24 (2d Cir. 2014) ; Joseph General Contracting, Inc. v. Couto, 317 Conn. 565, 119 A.3d 570 (2015) .
 Mutuality is the centerpiece to waiving or modifying a contract, just as mutuality is the centerpiece to forming any contract. Quality Products and Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362, 666 N.W.2d 251 (2003) .

20   Vasily v. MONY Life Ins. Co. of America, 104 F. Supp. 3d 207 (D. Conn. 2015) .

21   Pocatello Hosp., LLC v. Quail Ridge Medical Investor, LLC, 156 Idaho 709, 330 P.3d 1067 (2014) ; Blackstone Medical, Inc. v. Phoenix Surgicals, L.L.C., 470 S.W.3d 636 (Tex. App. Dallas 2015) .
 Under Louisiana law, contract modification will not be effected when there is no meeting of the minds regarding the modification, such as when parties did not discuss or agree to the change. Society of Roman Catholic Church of Diocese of Lafayette, Inc. v. Interstate Fire & Cas. Co., 126 F.3d 727, 47 Fed. R. Evid. Serv. 1406 (5th Cir. 1997) .

22   Tech Center 2000, LLC v. Zrii, LLC, 2015 UT App 281, 363 P.3d 566 (Utah Ct. App. 2015) .

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