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Put simply, it was not and is not wise to put one’s faith in a legal rule
amounting to what is charitably described as a legal fiction or a formality.22
Of course, the employee can still dispute the change on other, substantive
grounds, without the consideration argument. In Watson, the employee
was told to sign the new contract or lose her job. While not every case with
these circumstances amounts to duress, it certainly amounts to one red flag
going to the enforceability of that modification. But in these circumstances,
arguments relating to consideration are a poor surrogate for the real dispute
between the parties. The real dispute is whether the employee acted with
any real agency in accepting the change. The fresh consideration rule does
not assess that.
This is the fundamental problem with how we have grown to view the
doctrine of fresh consideration supporting a change to a contract: it was not
designed as a means to protect vulnerable parties, ensure substantive fairness
or confirm the agency of one’s decisions. It was designed to distinguish
between what is a legally enforceable promise and what is a gratuitous or
moral promise.23 There either was fresh consideration or there was not.
Doctrinally, however, the fresh consideration rule did not give a whit about
fairness or agency.24
Beyond its ineffectiveness as a useful legal analysis to test the fairness or
autonomy of a contractual change, the fresh consideration rule was also
doctrinally unsound because it led to outcomes contrary to the average
business person’s expectations. The court, applying the fresh consideration
rule, could void reasonable amendments to a contract even though the parties
had agreed to the change. In some cases, courts invalidate agreements
on the basis of the timing of the delivery and execution of contractual documents.
25 But if the parties have agreed and there is no issue with the voluntariness
or autonomy of the vulnerable party’s decision, why does the
law not allow these agreements? As stated by one judge, in these circumstances,
the fresh consideration rule becomes a legal fiction in aid of a particular
The law should not seek to perpetuate rules that run contrary to the reasonable
expectations of parties acting with autonomy. Courts should strive
to uphold bargains freely entered into.27 Where there is some question
about whether the contract was truly freely entered into, the court should
test that concern, not a nominal exchange of value or forbearances.
ROSAS: CONSIDER UNFAIRNESS AND AUTONOMY DIRECTLY
The fresh consideration rule was therefore a distraction from the objective
assessment of the fairness and legitimacy of a contractual modification.
Rosas shifts the focus back to what ought to matter: What actually happened