Universal Builders, Inc. v. Moon Motor Lodge, Inc.
430 Pa. 550, 244 A.2d 10 (Pa. 1968)
- Universal entered into a contract with Moon to build a motel and restaurant. The contract stipulated that all changes to the contract must be made in writing. It also stipulated certain building requirements. One of the subcontractors used lower grade masonry than was specified in the contract.
- Moon threw a fit and withheld all payments to Universal until Universal agreed to sign a supplemental contract to pay Moon $5k in damages and perform additional work to repair the masonry. Universal signed, completed the project, and then went bankrupt. Universal’s trustee sued Moon, claiming that the supplemental agreement was induced under fraud.
- The trustee also argued that Moon also made numerous oral change orders that Universal did the work for, even though there was a stipulation that change orders need to be in writing.
- Moon’s representative was onsite watching the work be done. This could even be considered an implied contract, which wouldn’t require a formal oral or written agreement at all!
- The Trial Court found (partially) for Universal. Moon appealed.
- The Trial Court found that Moon needed to pay Universal the $127k they still owed for the original contract.
- Moon unsuccessfully argued that since the original contract had not been modified under a written change order, they were not liable to pay for anything that wasn’t written down in a change order.
- Universal unsuccessfully argued that the supplemental agreement was void, under the Fraudulent Conveyance Act.
- Appellate Court affirmed.
- The Appellate Court found that the effectiveness of a non-written modification in a contract that requires modifications must be written depends upon whether enforcement of that condition is or is not barred by equitable considerations, not upon the technicality of whether the condition was or was not expressly and separately waived before the non-written modification.
- The Court found that Moon mislead Universal into doing extra work without written authorization to benefit from nonperformance of that condition.
- Compare this case to Brian Constr. & Dev. Co. v. Brighenti (A.2d 72 (Conn. 1978)), where the Court held that oral modifications to contracts were enforceable so long as there was consideration on both sides.