Cengage Advantage Books: Business Law 9th Edition by Arnold Goldman ,William Sigismond

Exercise 4

The City of Newland through its financial director entered into a contract with Armae, a waste management contractor, to haul away all the city's waste products for a certain price. After the contract was made, several new rental units were built in the city, and Armae, based on his higher costs, asked the city for an additional $20,000 dollars a year. At a public meeting, all city council members voluntarily voted to authorize the mayor to pay Armae the additional amount. Several community citizens who attended the meeting then sued the city, claiming that the additional compensation should have been denied. They based their claim on the theory that a contract was already in place and that there was no consideration for the payment of the increased compensation. Were the contract modification and additional $20,000 per year to Armae valid?