## Facts

- Newport, Rhode Island contracted with a private refuse collector, Maher, under a five-year agreement (July 1, 1964–June 30, 1969) for $137,000 per year to collect and remove all city waste.
- Maher priced the contract assuming annual growth of 20–25 new dwelling units, consistent with historical patterns.
- During the contract term, Newport experienced an unexpected increase of about 400 new dwelling units over a short period, substantially increasing refuse-collection demands and Maher’s costs.
- In June 1967, after a public meeting where Maher explained the increased burden and answered questions, the city council authorized an additional $10,000 for the year ending June 30, 1968.
- In June 1968, the council again authorized an additional $10,000 for the year ending June 30, 1969, resulting in $20,000 total above the original contract price.
- The Director of Finance paid the additional sums pursuant to the council authorizations.
- City taxpayers sued the finance director, the city, and Maher, alleging the extra payments were unlawful and seeking restitution to the city.
- After a bench trial, the Superior Court ordered Maher to repay $20,000; Maher appealed.

## Issues

1. Whether the additional payments were invalid under the Newport city charter due to alleged noncompliance with required municipal expenditure procedures.
2. Whether the contract modification was unenforceable for lack of consideration under the pre-existing duty rule, given Maher’s existing obligation to collect all refuse.
3. Whether a modification of an executory service contract is binding without new consideration when prompted by unanticipated circumstances and when the adjustment is fair and equitable.

## Decision

- The Rhode Island Supreme Court reversed the Superior Court and upheld the contract modification.
- The court held the additional payments were not invalidated by the municipal charter on the facts presented.
- The court held the modification was enforceable despite the absence of new consideration because it met the Restatement (Second) of Contracts § 89(a) standard for modifying an executory contract.
- The court found the modification was made while the contract remained executory, was prompted by circumstances unanticipated at contract formation, and was fair and equitable.
- The court also relied on the absence of coercion or duress, treating voluntary, good-faith assent as a necessary condition for enforcement in this setting.

## Legal Principles

- A modification to an executory contract may be binding without new consideration when: (1) the contract remains executory, (2) the circumstances prompting the modification were unanticipated by the parties, and (3) the modification is fair and equitable in light of those circumstances.
- Courts may decline to apply a rigid pre-existing duty rule to good-faith modifications responding to unforeseen conditions, particularly where the change is not the product of duress.
- The policy of enforcing good-faith contract modifications without new consideration, reflected for goods transactions in U.C.C. § 2-209(1), can be implemented for service contracts through Restatement (Second) of Contracts § 89(a).
- Municipal authorization procedures are evaluated in context; where the governing body openly considers and approves the expenditure and payment is made pursuant to that approval, a claimed procedural defect will not necessarily invalidate the payment.

## Conclusion

The court enforced Newport’s agreed price increases for refuse collection because the modification occurred before full performance, responded to an unanticipated surge in workload, was approved after public scrutiny, and was fair, equitable, and voluntary, making it binding even without fresh consideration.


Angel v. Murray, 113 R.I. 482, 322 A.2d 630 (R.I. 1974)