Why should contracts be allowed to be altered without fresh consideration?

The question invites an analysis of the law of contract’s treatment of contractual variations. I
shall focus on the two vital elements, i.e. “‘fresh’ consideration” and “agreed modification”
(consent i.e. mutual agreement). There is a sliding scale in the way these two elements are
applied by the courts. Earlier, before the development of the doctrine of economic duress, the
courts applied a strict consideration test to contractual variations. Recently, they have diluted the
consideration test so that it is easier for them to ‘unearth’ consideration for the variation. This
has been possible only because the doctrine of economic duress has developed enabling them to
find that the modification is voidable where there is an application of economic pressure by one
party on the other to secure the modification. I shall show that the courts have also strengthened
their armoury by drawing on the equitable doctrine of estoppel to ensure that parties are bound
by agreed (express or implied) modifications. This modern law approach recognises that it is in
the commercial interest of the parties to negotiate and modify contracts, especially long-term
contracts that might turn out to be unviable or infeasible with the passage of time.

Classical law tested the validity of contractual modifications by using the same criteria as were
used to test the legality of the initial contract. Furthermore, I shall discuss the requirement of
consent. Express consent was required for any contractual modification. The classical law failed
to recognize that many contractual modifications are carried out in an informal manner. Thus,
this requirement proved to be unnecessarily strict.

There were two routes around these problems. Firstly, the parties could terminate the original
contract and enter into fresh contract. However, the problem with this method was in proving
free consent for the “modification”. Secondly, the parties could get around the problem of lack of
consideration by slightly altering the earlier consideration.

A. Manipulation of the doctrine of consideration 

the Williams case is important because the court accepted the argument that a promise to pay
additional compensation to secure pre-existing contractual duties was not void for lack of
consideration. The practical commercial benefits of being reassured that the contract would not
be broken were enough consideration. In this case, the practical benefits included a more
systematic work practice, avoiding the penalty payable and avoiding the expense of contracting
with another person if this contract were breached. However, these were all benefits which
would have been of no value had the original obligation been performed. This is a clear
indication that the consideration test has been diluted. 

Freedom of Contract Law

Freedom of contract gives people the right to make private commitments to one another when
they do not agree with society's standards. The government, or any other outside source, cannot
hinder a contract. 
The belief that the parties are to rightfully fulfill their obligations combined with the decision to
settle all disputes out of court is the basis of global business transactions.

Freedom is described as the mutual decision to enter into a contract and how it should be written.
Parties are free to draft their own contracts that are specific to their business transaction, as long
as they do not involve illegal activities or include unfair terms.

However, state law may limit parties' freedom to create their own contract based on how it is
written. Contracts including wording that limit or dismiss the fair treatment of either party
are not of good morals. These kinds of contracts are automatically dismissed. This prevented a
party from behaving opportunistically and unilaterally varying the original contract.