The Oral Variation of a Contract and a ‘No Oral Modification’ Clause

The Supreme Court confirmed that a No Oral Modification (“NOM”) clause is legally effective.  The parties in this case were not able to agree orally that the a contract should be varied, which would have been an oral variation to dispense with the NOM clause.  Only a written variation sufficed to vary the contract.   

What the judgment emphasises is that, when varying a contract, parties should note:

  • whether the contract they wish to vary includes a NOM clause; and
  • whether the contract prescribes for a mechanism by which the contract will be varied. 

The parties should abide by the NOM clause and any other provisions of the contract in order to effectively and enforceably vary the contract. 

If parties dispute the oral variation of a contract that contains a NOM clause, the party relying and acting upon on such oral variation will have to turn to the various doctrines of estoppel for support.  But, the extent to which estoppel can rescue a party is limited.  As Lord Sumption noted:

the scope of estoppel cannot be so broad as to destroy the whole advantage of certainty for which the parties stipulated when they agreed upon terms including the No Oral Modification clause”. 

Managing all variations in writing can be difficult in a construction context where a lot of the communications are more informal, and parties should think carefully before including a NOM clause in their contracts.

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

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