Legal Developments In Construction Law

1. Supreme Court says parties must stick to their NOM clause

   Does a NOM clause mean what it says? A "No Oral Modification Clause" says that an agreement can only be amended in writing signed on behalf of the parties. But does a NOM clause work? The Court of Appeal said no but did the Supreme Court agree?

   It did not. In the opinion of the majority of the Court, the law should and does give effect to a contractual provision requiring specified formalities to be observed for a variation. What the parties to a NOM clause have agreed is not that oral variations are forbidden, but that they will be invalid. It is not difficult to record a variation in writing, except, perhaps, in cases where the variation is so complex that no sensible business person would do anything else. The natural inference from the parties' failure to observe the formal requirements of a NOM clause is not that they intended to dispense with it but that they overlooked it. If, on the other hand, they had it in mind, then they were courting invalidity with their eyes open. There is a risk that a party may act on a contract varied orally, for example by performing it, and then find itself unable to enforce it but, in England, the safeguard against injustice lies in the various doctrines of estoppel.

   A second issue raised in the appeal was whether an agreement to vary a contract to pay money by substituting an obligation to pay less money or the same money later, is supported by consideration. Any decision on this point was considered likely to involve re-examination of the decision in Foakes v Beer. The Court said it is probably ripe for re-examination but if it is to be overruled, or its effect substantially modified, it should be before an enlarged panel of the Supreme Court and in a case where the decision would be more than obiter dictum.

   Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24

2. Adjudication "true" valuation derails winding up petition

   A contractor brought a winding up petition, based on an adjudication decision and the court's summary judgment in its favour, against its employer under a building contract. The judgment debt was due and payable, had not been stayed and could not be said to be in dispute as a judgment debt. The employer failed to comply with the court order. In a second adjudication, however, the adjudicator had ruled that the contractor had received of the order of £1.5 million in excess of the sum due on a "true" valuation in accordance with the contract. That amount received by the contractor did not include the unpaid judgment sum. Did the second adjudicator's finding make a difference?

   The employer claimed that if it paid the judgment...