Variation of Contracts

by Ellis Van Der Vos

Many contracts contain a clause to the effect that any variations must be made in writing and be signed by the parties to the original contract. In a number of recent cases up to and including in the Court of Appeal, variations alleged to have been agreed by the parties in other ways have been upheld, notwithstanding such “no oral modification” (or “NOM”) clauses.

However, the Supreme Court has recently held1 that a NOM clause prevented a purported oral variation from being effective. It was unanimously decided that there were legitimate reasons for using NOM clauses, including preventing attempts to undermine agreements informally, providing certainty and avoiding misunderstandings, and that they should be upheld.

Accordingly, if an amendment is wanted, it is essential to follow any contractual requirements. Also, if the amendment is to the benefit of one party only, the additional formalities for execution as a deed should be followed, so the amendment is not invalidated by the lack of consideration.

Finally, while it may be possible, even in the absence of a written agreement, for one party to be “estopped” by his conduct from enforcing the obligations of the other as originally drafted, it is worth remembering the underlying principle that estoppel operates as “a shield not a sword”. So, it may be of limited use to a party seeking to require the other to perform his obligations in the way the claimant alleges were amended by conduct.

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1 Rock Advertising Limited v MWB Business Exchange Centres Limited [2018] UKSC 24

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