Genny and Luke contract for Luke to build a home for Genny. Luke promises to build the house for $100,000 but a neighboring forest fire destroys the framing during construction. Luke must reframe the house. Does the preexisting duty rule prevent Luke from enforcing a contract in which he charges additional money to Genny?
A) Yes, because he has a preexisting duty to build the house and took the chance of an issue during the building process.
B) Yes, because there are no exceptions to the preexisting duty rule, especially in contracts for the sale of land and houses.
C) No, Article 2 of the UCC does not allow for enforcement of this contract.
D) No, because there are unforeseen circumstances (the forest fire) which require additional work (reframing the house).
E) No, a court would deem that he was under contract and it would unjustly enrich Luke to charge more money to reframe the house.

Question

Quizplus · Accepted Answer

The preexisting duty rule generally states that a party to a contract cannot demand additional compensation for performing a duty that is already required by the contract. However, if there are unforeseen circumstances that significantly change the nature of the original contract, such as a forest fire destroying part of the construction, this can provide an exception to the preexisting duty rule. In this case, the unforeseen circumstance (the forest fire) that destroyed the framing requires additional work not contemplated in the original agreement, allowing Luke to renegotiate the contract terms to include the additional work needed.

Genny and Luke Contract for Luke to Build a Home