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Variations To Contracts

Introduction

There is often a standard clause in contracts which says something like: “variations to this contract must be set out in writing and signed on behalf of both parties.”

There have been a couple of cases before the courts recently which have cast doubt on the enforceability of such a provision. Both cases considered similar clauses and, effectively, decided that they should not prevent the parties from agreeing to vary the contract orally. The main reasoning behind these decisions is that parties should be free to agree how they choose to contract.

Comment

Whilst, on the face of it, it might appear strange that a clear term of an agreement can be ignored, it probably makes sense from a practical perspective. Provided the parties are in agreement, variations should be enforceable in whatever form (ie whether oral or in writing). It would probably be unfair for the parties to agree a variation only for one to change their mind at a later date.

Contracting parties often want provisions in a contract that allow for changes subject to both parties agreement. A common provision is one that allows for an extension to a fixed term agreement subject to both parties agreement. My view, is that such clauses are often unnecessary as, provided all parties agree, an extension (in this example) can be put in place and does not need to be expressly provided for in the agreement.

This should not be relied upon for legal advice. If you would like any further information or advice please email richard@clariclegal.co.uk.

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