No Oral Modification Clauses
30 Sep 2019
(1)Last year, in its decision in Rock Advertising Limited v MWB Business Exchange Centres Limited (Rock Advertising), the United Kingdom Supreme Court unanimously upheld an appeal from a decision of the United Kingdom Court of Appeal that had denied the effectiveness of a “No Oral Modification” clause (NOM clause). As will be discussed below, Lord Sumption, with whom Lady Hale, Lord Wilson and Lord Lloyd-Jones agreed, found that a purported oral variation to a written contract which contained a NOM clause was ineffective where the parties did not comply with the express contractual requirements that any variation be in writing and be signed by the parties (Lord Briggs took a different path to the same result).
(2)The decision in Rock Advertising emphatically resolved some ambiguity in earlier decisions of the United Kingdom Court of Appeal, and undoubtedly indicates a shift in the legal position with respect to freedom of contract in the United Kingdom. The decision also heralds a divergence from the position adopted in Australia, namely that a subsequent oral agreement to vary or modify a written contract contains an implied agreement to dispense with the strict requirements of any NOM clause. Given the influence that decisions of the United Kingdom’s highest courts have historically had on Australian courts, it is worthwhile to examine how Rock Advertising may impact upon the Australian position (if at all).