Worth The Paper They're Written On - Supreme Court Backs Variations-In-Writing Clauses

We reported back in 2016 on a case that appeared to signal the end for so called variation-in-writing (or anti-oral variation) clauses - Writing on the wall for variations-in-writing clauses?

In a recent case, the Supreme Court reached a different decision and upheld the enforceability of these types of clauses.

In a decision that had significant ramifications for the construction industry (and which attracted plenty of comment) the Court of Appeal in Globe Motors ruled that the principle of freedom of contract meant that although parties to a contract might agree variations should be in writing, there was no bar to them subsequently deciding otherwise and agreeing variations to their contract orally, or for that matter by course of conduct. Other court decisions, particularly in the English courts, had backed this approach, though there remained considerable uncertainty.

The Supreme Court in Rock Advertising Limited v MWB Business Exchange Centres Limited, overturning the earlier Court of Appeal decision and that in Globe Motors, has disagreed and reinstated the validity of Variation-in-Writing clauses. In doing so it has brought clarity to an area that has provided fertile grounds for disputes.

The clause in question in Rock's Contract stated "All variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect." The Supreme Court upheld the enforceability of this clause. In particular it rejected the argument that freedom of contract allowed the parties to subsequently agree to vary the contract orally, pointing out that almost every contract restricts the rights of the parties to it, and binds parties to a particular course of conduct to which they must adhere.

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