The Court of Appeal held that a clause which required any variation to a contract to be in writing and signed did not prevent an oral variation of the contract.
Parties can contract in any way they see fit: in writing, orally or by conduct. The fact that a contract includes a term requiring variations to be in writing and signed does not prevent the parties from later making a new contract varying the original contract by oral agreement or conduct.
In a recent case, the High Court held that an anti-oral variation clause stopped a later oral agreement relating to the contract from being enforceable.
However, the Court of Appeal had a different view. They took the position that a term preventing non-written variation of a contract cannot prevent a valid oral agreement to vary the contract by a senior employee who had ostensible authority to do so. In addition, if there is good consideration for the oral agreement, it will be upheld.
This decision confirms, once again, that the freedom to contract is a cornerstone of English law. However, that doesn’t mean anti-oral variation clauses have no value. First of all, they encourage parties to maintain a written record of changes to a contract. In addition, they are a mechanism through which a party can, without incurring the rancour of their counterparty, resist any attempt to vary a contract orally. Ultimately, this ensures that certainty of outcome is maintained for everyone, at all times.
At Woodfines, we can make certain your contract is drafted as tightly as possible, removing ambiguity and giving you the tools to ensure that the terms remain clear and unambiguous going forward. For further information or advice, please contact a member of our Company Commercial team on CommercialDept@woodfines.co.uk