Posted: Thursday, 17 May 2018 @ 11:33
Last August I blogged about the perils of trying to rely on a hotly disputed contract where the contract was based on an alleged conversation in a pub.The spat between Jeffrey Blue and Mike Ashley ended up in the High Court which found that no contract had been made.
But this also applies to any any variation of a contract. To avoid problems down the line all variations should be recorded in writing and signed off by all parties, so it is quite clear what has been agreed and when.
This advice has been highlighted by the decision of the Supreme Court in the last few days in the case of Rock Advertising v MWB Business. This involved a licensing agreement between Rock and MWB which contained a clause, so often found in commercial contracts, that "all variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect." Rock claimed that an oral agreement had been reached with the landlords MWB over payment of arrears of rent. MWB denied this, but also pointed to the clause and said that as nothing had been agreed in writing that was an end to the matter. The Supreme Court agreed with MWB.
Disputes often blow up because those involved have a different opinion on what they had agreed or what they were required to do. All businesses should adopt the following pratice:
- Make sure that agreement has been reached on all the important contract clauses.
- Record all pre-contract negotiations and confirm everything in writing and/or e-mail
- Make sure that the contract states exactly what is understood to have been agreed
- Negotiate exclusion clauses and make sure that they are fair and enforceable
- Agree on any standard terms and conditions to be used and that they comply with the unfair contract terms law
- Provide any standard terms and conditions with the contract paperwork, not on the back of invoices.
- Get advice on your contract documentation and repeat the process regularly to make sure that it has kept up with the law.
- Agree all variations in writing and get them signed off by all parties.
At the end of the day judges have an unenviable task of piecing together historical threads and will always start off with written evidence. They will always view oral evidence with suspicion, and in commercial cases more so. If there is a "no oral variation clause" then variations must be agreed in writing.
Businessmen should act accordingly and record their dealings in writing and get them signed off.It is common sense and best practice, and may save a considerable amount of money in the event of a dispute.
Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation
to discuss your particular circumstances.