Any change in an existing contract, such as a modification of the rate of compensation, or a supplemental agreement, must have a new consideration to support it.
An employee entered into an employment agreement with his employer. When the employee was offered more money from another employer, a conversation ensued between the employee and its current employer. The first contract was destroyed and a second employment contract was drawn up indicating an increase in the employee's salary. The employee eventually filed a claim for breach of contract and sought enforcement of the second contract. A jury entered a verdict in favor of the employee, but the trial judge set aside the verdict finding that the evidence did not support jury's conclusion that parties mutually agreed to revoke the first contract, thus the second contract was unenforceable for lack of consideration because employee was already obligated to work for his employer. On appeal, the appellate court reversed in favor of the empoyee. The case was elevated to the Court of Appeals of New York.
Was the second contract enforceable?
The Court held that the second contract was indeed enforceable. It found that the parties expressly rescinded the first contract. Therefore, there was adequate consideration to support the enforcement of the second contract.