Alaska Packers’ Association v. Domenico

Brief Fact Summary. Sailors who agreed to work for company refused to adhere to the original contractual terms and demanded increased compensation. The company’s representative agreed to the higher compensation in a new contract.

Synopsis of Rule of Law. There can be no consideration for a modified contract that arises from a coerced promise for increased compensation for performing what one is already obligated to perform.

Facts. Sailors agreed to work in Alaska for a set sum. Once the workers arrived at the job they demanded higher wages for the same work from the company’s representative. The representative claimed that he had no authority to alter the contract. However, because the company was in a situation where it was impossible to bring in other workers, he agreed to the change the compensation. Later the company refused to pay the higher wages.

Issue. Is there consideration when one party refuses to uphold the terms of the contract to the detriment of the other party?

Held. No. The workers new contract is based solely on the agreement to render the services previously contracted for. The Appellant has gained nothing from entering into the new contract where the previous compensation was lower than what he is now obligated to pay. Thus, there is no bargained for exchange.
A party who refuses to perform and coerces a promise from the other party to pay increased compensation takes an unjustifiable advantage of the necessities of the other party.

Discussion. The court does not see a bargained for exchange based on the facts of the modified agreement, due to the involuntary nature of the company’s modification.