‘Get it in writing’ is a favourite refrain of lawyers. Although contracts can be made orally, or even by a course of conduct, a written agreement gives certainty and avoids difficult evidential disputes about what was or wasn’t agreed.

‘Anti-oral variation’ clause

To add further certainty to a written agreement, parties will often include what’s known as an ‘anti-oral variation’ clause – basically, a clause that says a variation of the agreement is only effective if it is made in writing and signed by both parties. This type of clause is intended to exclude the possibility of the agreement being amended orally – again in order to give certainty and avoid disputes.

But, if a contract can be made orally can the parties agree (orally) to vary the (written) agreement to remove (or at least waive) the ‘anti-oral variation’ clause and then agree (orally) to make some other amendment to the main terms of the agreement? Is an ‘anti-oral variation’ clause actually effective at all to prevent oral amendments to a written agreement?

The Court of Appeal: in two minds

Unfortunately, the Court of Appeal has previously been unable to decide whether an ‘anti-oral variation’ clause has the effect of preventing oral variations or whether, despite such a clause, the parties can still agree an oral change to a written agreement.

In 2000[1], the Court said an anti-oral variation clause in a deed meant an oral variation of the written terms was of no effect. But just two years later in 2002[2] the Court took a different view and said that such a clause did not in fact prevent an oral variation of the contract which contained it. The Court said that “in a case like the present the parties have made their own law by contracting, and can in principle unmake or remake it“. (Bizarrely, in his 2002 judgment the leading judge made no reference to the 2000 case despite the fact that he had been involved in that earlier appeal!)

A new decision

The question has recently come before the Court of Appeal again[3]. Although this case was decided on a different point and it wasn’t actually necessary to comment on the effect of the anti-oral variation clause, given the conflicting decisions referred to above, the Court decided some clarity was needed.

The Court said that an anti-oral variation clause does not prevent subsequent oral variations: “the fact that the parties’ contract contains [an anti-oral variation] clause…does not prevent them from later making a new contract varying the contract by an oral agreement or by conduct”. The Court acknowledged that evidential problems and difficulties of proof could always occur in relation to oral contracts. “Strong evidence” would therefore be required for the court to decide that a contract containing an anti-oral variation clause had indeed been varied orally.

Mind what you say…

Despite this latest decision it seems likely that many agreements will continue to contain anti-oral variation clauses in order to encourage parties to agree changes in writing. But they need to be aware that, despite such a clause, their conversations could still amount to a variation of the contract if the other requirements for a valid contract (in particular, an intention to create legal relations and certainty of terms) are present.

This post was edited by Sophie Brookes. For more information, email blogs@gateleyplc.com.

[1] United Bank Ltd v Asif (11 February 2000)

[2] World Online Telecom Ltd v I-Way Ltd [2002] EWCA Civ 413

[3] Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd [2016] EWCA Civ 396

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.