Rosas v Toca – Asses and 'Incremental Changes' to Consideration

Abstract

In early 2018 I wrote in the pages of this journal that the “case law in Canada relating to variation contracts is currently in a state of some confusion”. In particular, I was referring to the confusion surrounding whether or not consideration was required to support a variation agreement. Such confusion in the case law had not always been the case. The traditional, orthodox position in Canada and in England had been clear and internally consistent, even if it was disliked by many commentators. This orthodoxy was often known as the “pre-existing duty rule” and was based upon two premises. First, agreements to vary an existing contract are also contracts and, as such, these variations need to be supported consideration flowing from both sides to be enforceable at law. Second, the consideration provided by each party cannot merely be the re-promising or the performance of what was already promised in the original contract. This is because such a re-promise or performance would provide nothing more than what the other party was already owed and would be functionally the same as doing nothing. Instead, the consideration has to be something extra to that already promised in the original contract. Bringing these two premises together, a wholly one-sided variation to an existing contract, benefitting solely one party, was not legally enforceable since the benefitted party had provided no consideration in return for the variation in their favour.