Illinois Courts Hold Specific Requirements for Enforcement of a Contract Modification
Illinois courts have defined a contract “modification” as a change in one or more respects which introduces new elements into the details of the contract, or cancels some of them, but leaves the general purpose and effect undisturbed. Schwinder v. Austin Bank of Chicago, 348 Ill.App.3d 461, 468 (1st Dist. 2004). Modification of a contract normally occurs when the parties agree to modify a contractual provision or to include additional obligations, while leaving intact the overall nature and obligations of the original agreement. Id. Parties to an existing contract may, by mutual assent, modify the purchase contract provided that the modification does not violate law or public policy. Id. Further, parties to a contract are ordinarily as free to change the agreement after making it as they were to make it in the first instance. Id.
In deciding whether to give effect to an attempted contract modification, the analysis does not depend on the nature of the contractual provision at issue. Kinkel v. Cingular Wireless LLC, 223 Ill.2d 1, 14-15 (2006). The First District Illinois Appellate Court has held that a valid modification of a contract must satisfy all the criteria essential for a valid original contract, including offer, acceptance, and consideration. Id. Modification of a contract is itself a contract and only enforceable where ordinary standards of contract law are satisfied. Id. Because, no contract can be modified in ex parte fashion (after the original contract is formed) by one of the contracting parties without the knowledge and consent of the remaining parties to the agreement, mutual assent is therefore, as much a requisite element in effecting a contractual modification as it is in the initial creation of a contract. Id. at 469.
In addition, Illinois courts have held that contractual terms may be modified as long as there is consideration for modification, which may be manifested with some bargained-for exchange between parties. Advance Iron Works, Inc. v. ECD Lincolnshire Theater, LLC, 339 Ill.App.3d 882, 887 (2d Dist. 2003). The essential element of consideration is a bargained-for exchange of promises or performances that may consist of a promise, an act, forbearance, or the creation, modification, or destruction of a legal relation. Ross v. May Co., 377 Ill.App.3d 387, 391 (1st Dist. 2007). A bargained-for exchange exists if one party's promise induces the other party's promise or performance. Id. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.” Id.
A modified contract containing a term inconsistent with a term of the original contract or an earlier contract between the same parties may be interpreted as including an agreement to rescind the inconsistent term in the original or earlier contract. Schwinder, 348 Ill.App.3d at 469. Thus, the modified contract is regarded as creating a new single contract consisting of the terms of the prior contract that the parties have not agreed to change, in addition to the new terms on which they have agreed to change. Id. Furthermore, when a contract is modified or amended by a subsequent agreement, any lawsuit to enforce the contract must be brought on the modified agreement and not on the original agreement. Id.
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