National Surety contends a fourteen-page settlement agreement that resolved an end-of-work payment dispute was a substitute contract, entirely replacing a multifaceted AIA Contract for the construction of an apartment complex. Assuming, arguendo, that the 2007 settlement agreement could influence the operation of the Waivers—it cannot—National Surety’s argument nevertheless fails because the plain and unambiguous terms of the settlement agreement evince an intent not to “extinguish [] the old contract, by the substitution for it of the new one.” Leisner v. Finnerty, 252 Md. 558, 564 (1969). Rather, the 2007 agreement merely modified the AIA Contract, and the Waivers of the AIA Contract prevail because they are not inconsistent with the 2007
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at 564 (emphasis added) (quoting Dist. Nat’l Bank of Wash. v. Mordecai, 133 Md. 419, 427 (1919)). A court will find a substitute contract:
[W]here the parties intend the new agreement itself to constitute a substitute for the prior claim, then this substituted contract immediately discharges the original claim. Under this latter type of arrangement, since the original claim is fully extinguished at the time the agreement is made, recovery may only be had upon the substituted contract.
Clark v. Elza, 286 Md. 208, 214 (1979) (emphasis added). Critically:
A novation [ ] is never presumed; the party asserting it must establish clearly and satisfactorily that there was an intention, concurred in by all the parties, that the existing obligation be discharged by the new obligation. Harford Bank of Bel Air v. Hopper’s Estate, 169 Md. 314, 330, 181 A. 751, 758 (1935); District Nat’l. Bank of Washington v. Mordecai, supra. As was stated in Mordecai, “[I]t does not result from the substitution of one paper writing for another, or one evidence of debt for another, or one contract for another, unless such substitution is made with the intention of all the parties concerned to extinguish the old one,” 133 Md. at 427, 105 A. at …show more content…
Berman Props. v. Porter Bros., Inc., 276 Md. 1, 8 (1975) (emphases added); see also Restatement (Second) of Contracts § 279 cmt. a (“If the parties intend the new contract to replace all of the provisions of the earlier contract, the contract is a substituted contract.” (emphasis added)). If, however, a subsequent agreement does not “clearly and satisfactorily” evince an intent to completely extinguish all the provisions of the prior contract, then the subsequent contract is a mere modification that alters the original contract to the extent the two agreements are inconsistent. See 13 Sarah Howard Jenkins, Corbin on Contracts § 71.1(5), at 412-13 (2003) (“[T]he new contract may adopt and include a part of the antecedent one. Consequently, the two contracts must be construed together. Insofar as they are inconsistent, the later one prevails; the remainder of the first contract, if consistent with the second in substance and in purpose, can be enforced.”); Banque Nationale de Paris v. Batmanghelidj, No. 96-7444, slip op. at 4, 1997 U.S. App. LEXIS 5132 (2d Cir. Mar. 18, 1997) (“Although it is well settled that when parties enter into an agreement that expressly supersedes a prior agreement, the prior agreement shall be void, . . . it is equally clear that when a new agreement merely modifies an earlier agreement, any provisions of the earlier agreement that are consistent with the modified version will
at 564 (emphasis added) (quoting Dist. Nat’l Bank of Wash. v. Mordecai, 133 Md. 419, 427 (1919)). A court will find a substitute contract:
[W]here the parties intend the new agreement itself to constitute a substitute for the prior claim, then this substituted contract immediately discharges the original claim. Under this latter type of arrangement, since the original claim is fully extinguished at the time the agreement is made, recovery may only be had upon the substituted contract.
Clark v. Elza, 286 Md. 208, 214 (1979) (emphasis added). Critically:
A novation [ ] is never presumed; the party asserting it must establish clearly and satisfactorily that there was an intention, concurred in by all the parties, that the existing obligation be discharged by the new obligation. Harford Bank of Bel Air v. Hopper’s Estate, 169 Md. 314, 330, 181 A. 751, 758 (1935); District Nat’l. Bank of Washington v. Mordecai, supra. As was stated in Mordecai, “[I]t does not result from the substitution of one paper writing for another, or one evidence of debt for another, or one contract for another, unless such substitution is made with the intention of all the parties concerned to extinguish the old one,” 133 Md. at 427, 105 A. at …show more content…
Berman Props. v. Porter Bros., Inc., 276 Md. 1, 8 (1975) (emphases added); see also Restatement (Second) of Contracts § 279 cmt. a (“If the parties intend the new contract to replace all of the provisions of the earlier contract, the contract is a substituted contract.” (emphasis added)). If, however, a subsequent agreement does not “clearly and satisfactorily” evince an intent to completely extinguish all the provisions of the prior contract, then the subsequent contract is a mere modification that alters the original contract to the extent the two agreements are inconsistent. See 13 Sarah Howard Jenkins, Corbin on Contracts § 71.1(5), at 412-13 (2003) (“[T]he new contract may adopt and include a part of the antecedent one. Consequently, the two contracts must be construed together. Insofar as they are inconsistent, the later one prevails; the remainder of the first contract, if consistent with the second in substance and in purpose, can be enforced.”); Banque Nationale de Paris v. Batmanghelidj, No. 96-7444, slip op. at 4, 1997 U.S. App. LEXIS 5132 (2d Cir. Mar. 18, 1997) (“Although it is well settled that when parties enter into an agreement that expressly supersedes a prior agreement, the prior agreement shall be void, . . . it is equally clear that when a new agreement merely modifies an earlier agreement, any provisions of the earlier agreement that are consistent with the modified version will