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Contracts, are they set in stone?

This year has already seen a series of cases in which the Courts have held that a “no variation” clause in a Contract is not binding, What we see is a clear intent on the part of the Courts that contractual agreement should be eroded in favour of “party, autonomy” and greater flexibility.

An automotive supply contract said:

“This agreement… is the only agreement between the parties relating to the subject matter hereof. It can only be amended by written document which:

Specifically, refers to the provisions of this agreement … and s signed by both parties”.

Despite that the Court of Appeal decided that it could be amended by oral agreement – “The parties have freedom to agree whatever terms they choose to undertake and can do so in a document, by word of mouth or by conduct …. The fact that the parties’ contract contains a clause such as this does not prevent them from later making a new contract varying the new contract by an oral agreement or by conduct”.

An office licence agreement contained this clause:

“Sets out all the terms agreed … no other representations or terms shall apply or form part of this licence. All variations to this licence must be agreed, set out in writing and signed on behalf of both parties before they take effect”.

On again the Court of Appeal held that such an anti-variation clause did not prevent there being a variation by oral agreement.

A land development agreement said:

“No modification, alteration or waiver of any of the provisions of this agreement, except as otherwise provided in this agreement, shall be effective unless it is in writing and signed by or on behalf of the party”.

Despite that wording the TCC held at the contract could be changed by oral agreement.

So the Courts are leading towards a more liberal approach, so an anti-oral variation clause can indeed be varied orally. This assumes of course that the Court is satisfied objectively that the parties did genuinely intend to vary the Contract.

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