A Contract Does Not Always Mean What It Says...

MWB Business Exchange Limited v Rock Advertising Limited [2016] EWCA Civ 553

The Facts

Rock Advertising ("Rock") enjoyed a licence for serviced offices belonging to MWB Business Exchange Limited ("MWB"). Rock had in fact been in occupation for over seven years when it renegotiated its licence to take additional space at an increased fee.

The licence contained a clause which stated that all "variations to this licence must be agreed, set out in writing and signed on behalf of both parties before they take effect."

Unfortunately, Rock's business did not expand as anticipated and it fell into arrears.

Rock claimed that it orally agreed a payment plan (the "Payment Plan") with MWB's credit controller and then paid over £3500 on that same day. The Payment Plan involved making reduced payments initially but then making up the balance by the end of that year.

Subsequent to this, MWB denied that the Payment Plan had been agreed and terminated Rock's licence. MWB then brought these proceedings in respect of the arrears.

The law

This case involved an examination of the following principles:

The enforceability of "non-variation" clauses that say that contracts may only be varied in writing;

What constitutes "consideration" - all contracts must have an element of consideration given by both parties to be valid; and

Whether an estoppel arose - for an estoppel argument to succeed, the party must show that they acted to their detriment in reliance on a promise.

Rock's arguments

Rock defended the claim on the basis that:

(a) The Payment Plan constituted an oral contract which varied the payment provisions due pursuant to the licence; (b) In the alternative, MWB was now estopped from enforcing the terms of the licence as Rock had acted to their detriment by paying £3500 when the alleged Payment Plan was made.

MWB's arguments

MWB argued that it was not possible for the licence to be varied as the terms of clause 7.6 were clear:

"variations to this licence must be agreed, set out in writing and signed on behalf of both parties before they take effect."

Consequently, even if an agreement was made, it was not enforceable.

In the alternative, MWB denied there could be a valid contract as there was no consideration provided by Rock for the variation as Rock had simply agreed to pay the same sums that were already due under the licence. No further consideration for the new oral contract had been provided.

Further, there could be no estoppel as Rock had simply...