MWB Business Exchange Centres Ltd v Rock Advertising Ltd (2016)

Court of Appeal allows the parties to vary their agreement orally even though their agreement contained an "anti-oral variation" clause

In this interesting decision by the Court of Appeal, which places emphasis on contracting parties' freedom to agree terms, it decided that an anti-oral variation clause did not preclude the subsequent oral variation of the agreement. The oral agreement was supported by consideration.

After the appellant, Rock Advertising Ltd (a marketing services company), incurred arrears of licence fees and other charges, the respondent, MWB Business Exchange Centres Ltd (a company managing office space in London), exercised its right under the licence agreement to lock Rock Advertising out of the premises and gave notice. MWB claimed for arrears and damages. Rock Advertising counterclaimed for loss and damage for wrongful exclusion from the premises, claiming that an oral agreement had been made with the respondent's credit controller to re-schedule the licence fee payments to clear the arrears and that it had paid £3,500 on the same day in accordance with the revised payment schedule. MWB denied this, arguing that such an agreement would be unenforceable as it lacked consideration and that an oral variation to the licence was expressly prohibited by the written agreement.

The Court of Appeal held that on the question of the variation of contracts with anti-oral variation clauses, previous decisions on this point (United Bank Ltd v Asif (2000) and World Online Telecom Ltd (formerly Localtel Ltd) v I-Way Ltd (2002)) were inconsistent. World Online was correct and should be followed. The most powerful consideration was party autonomy and the principle of freedom of contract entitling parties to agree whatever terms they chose subject to certain...