§ 9.01 Good Faith Modification

Subsequent to the formation of a contract, the parties may, by mutual assent, modify the contract. The modification must be a product of good faith and fair dealing. A modification resulting from an improper threat to breach the contract or to refuse to do business with the party from whom the modification is sought – referred to as "business compulsion", "economic duress" or "extortion of a modification" – will be held unenforceable.

A party to a contract for the sale of goods must have a legitimate reason for seeking a modification. An example of a legitimate commercial reason to seek a modification may exist where a market shift would create a loss to the party seeking relief even if such circumstances would not justify an excuse of performance. [UCC § 2-209, comment 2]

§ 9.02 Consideration

The UCC does not require modifications to be supported by consideration. [UCC § 2-209(1)] In non-sale-of-goods executory contracts, a modification must be supported by new consideration except:

• if the modification is fair and equitable in light of circumstances not anticipated by the parties at the time contract was made (the "unforeseen difficulties exception"); or
• to the extent that justice requires enforcement of the modification due to a material change of position in reliance on the modified promise. [Restatement § 89]

§ 9.03 Writing Requirement

Under common law, there is some disagreement as to whether a contract that is subject to the statute of frauds may be modified orally. Jurisdictions also differ as to whether the parties may waive a contractual requirement that modifications be in writing. Nevertheless, promissory estoppel may be invoked to enforce an oral modification that is subject to the statute of frauds if it would be unjust to reinstate the original term(s) where a party materially changes position in reliance on the agreement to modify.

The UCC requires modifications to be in writing where:

• required by a signed agreement between the parties (in order to give effect to any such requirement stated on a form supplied by a merchant to a consumer, the consumer must also sign the form)
• the contract as modified falls within the statute of frauds. [UCC § 2-209(2), (3)]

§ 9.04 Ineffective Modification as Waiver of Original Terms

Under both common law and the UCC, an ineffective attempted modification that is unenforceable due to noncompliance with the writing requirement (and any consideration requirement under the common law) may constitute a waiver of the original terms. A waiver is only effective against an existing contractual right and cannot create a new obligation. Waivers generally apply to conditions in the contract, e.g., delivery or filing date if time is not of the essence, but not essential parts of the bargain, e.g., promise to render services or sell goods.

Unlike terms in the formation or modification of a contract, waivers do not require mutual assent or consideration and do not fall within statutory writing requirements. Waivers can generally be retracted unless the other party has relied on such waiver to his detriment.