Contracts and Sales Multistate Bar Practice Exam

When is performing an existing legal duty considered valid consideration under UCC?

1. Only when there is new consideration

2. Any good faith modification is acceptable

3. Only if it alters the original contract terms significantly

4. When the parties have come to a clear mutual agreement

The correct answer is: Any good faith modification is acceptable

Performing an existing legal duty can be considered valid consideration under the UCC when there is a good faith modification to a contract. The UCC recognizes that parties to a contract may encounter unforeseen circumstances that make performance more difficult than originally anticipated. To promote flexibility and fairness in commercial transactions, the UCC allows modifications to a contract, even if they do not include new consideration, as long as they are made in good faith. Good faith refers to the honest intention to deal fairly with the other party, without the intention of misleading or defrauding. This concept is especially important in commercial transactions, where parties may need to adjust their agreements to reflect changing conditions or practical realities. While it might be true that new consideration strengthens a modification, the UCC allows for modifications based on mutual agreement as long as they adhere to the principle of good faith. Thus, a modification stemming from an existing legal duty is valid and acceptable under the UCC, provided that it is done in good faith.