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Why you should read the small print!

It is common for contracts to include a clause saying the contract can only be varied in writing. In Rock Advertising Ltd v MWB Business Exchange Centres Ltd, Rock and MWB entered into a licence agreement with a generic clause requiring all variations to be set out in writing and signed on behalf of both parties. Rock fell behind on rent and a new payment schedule was agreed on the phone. Rock began to pay under the new payment schedule but MWB locked Rock out, terminated the licence and sued for the outstanding rent. Rock counter sought damages for wrongful exclusion. So, was the phone call varying the payment schedule effective or did it need to be in writing?

The Court of Appeal said the phone call did vary the contract even though it went against the no oral variation clause. Their thinking was the oral agreement itself was a contract and it was implied they intended to remove the no oral variation requirement.

The Supreme Court overruled this decision, saying the phone call did not vary the contract as it did not follow the variation requirements and that a contract should allow parties to bind their future conduct. This decision gives legal certainty that contract terms will be respected.

You should make sure you understand of all the terms of your contract. In particular standard ”boilerplate” legal clauses which may place restrictions on you such as above. You should make yourself aware of any contract restrictions, and act accordingly.

Top tip Read the small print and make sure you act in accordance with the contract terms.

For Commercial Law advice, please contact our Head of Company Commercial David Anderson.