Brief Fact Summary.
The Defendant, Blumenthal (Defendant) asks to have a rent increase abated and the Plaintiff Levine, (Plaintiff) agreed orally. Plaintiff sues for difference, due in the second year.
Synopsis of Rule of Law.
A preexisting duty cannot count as consideration for the purposes of contract formation.
Defendant agreed to pay a certain amount of rent for two years, with an increase in the second year. Defendant was unable to pay for the increase. It was found as a fact in district court that there was a verbal agreement to allow the defendants to pay the original year’s amount of rent for the second year.
Can the promise to perform a preexisting duty count as consideration?
No. Affirmed. A promise to do what the promisor is already bound to do is an unreal consideration. A creditor’s mere fear that the debtor will fall into bankruptcy is not enough to form sufficient consideration.
Any consideration to perform the new undertaking is satisfactory consideration.
The fact the agreement has been executed by the payment and acceptance of the reduced rent, does not mean the substituted performance stands.
The court adopts the preexisting duty rule, which results in the promisor being bound to what he is already obligated to do, unless there is a new consideration to replace the prior agreement.