Practice Quiz

Paralegal Exam Prep

Category - Contracts

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Car Fixer Guys signed a one-year agreement to provide oil change services to Taxi Cab Guys for $20 per oil change. Two months into the term of the agreement, Car Fixer Guys realized that the price was too low and raised it to $32 per car. Under common law, is the price change enforceable?
  1. Only if Car Fixer Guys provides additional consideration and Taxi Cab Guys agrees to the change.
  2. Yes, because an agreement to provide $20 oil changes is unconscionable.
  3. No. Once executed a contract cannot be modified.
  4. Yes, because there was no meeting of the minds prior to the modification.
  5. Only if Car Fixer Guys agrees to guarantee to purchase 20 oil changes per month.
Explanation
Answer: A. The price change is enforceable only if Car Fixer Guys provides additional consideration and Taxi Cab Guys agrees to the change. Under common law a modification to the terms of a contract must be supported by additional consideration, and both parties must agree to the modification. What constitutes additional, adequate consideration depends on the particular circumstances of each contract.
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