Contract terms and variations should be agreed in writing

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:

  1. Make sure that agreement has been reached on all the important contract clauses. 
  2. Record all pre-contract negotiations and confirm everything in writing and/or e-mail
  3. Make sure that the contract states exactly what is understood to have been agreed 
  4. Negotiate exclusion clauses and make sure that they are fair and enforceable 
  5. Agree on any standard terms and conditions to be used and that they comply with the unfair contract terms law 
  6. Provide any standard terms and conditions with the contract paperwork, not on the back of invoices.  
  7. Get advice on your contract documentation and repeat the process regularly to make sure that it has kept up with the law.
  8. 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
Call Nigel on +44 (0)1285 847 001 or by email
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.

Comments

  • There are no comments for this page - click here to be the first

Need legal advice for your business? We can help

Directors

Directors
Practical advice and legal support for company owners and directors.

Disputes

Disputes
In dispute with a customer or supplier? Get practical advice and support.

Your legal advisor

Your legal advisor
Board level legal advice without the costs of an in-house lawyer.

Speak to a lawyer

Speak to a lawyer
Cousins Business Law excels at demystifying potentially complex legal areas for small business owners
Simon Moore, MD Moore News Ltd

Get legal updates

Enter your email address to receive our monthly Blog Newsletter


We will keep your email safe in accordance with our privacy policy.

Get the FREE definitive guide to solving business disputes

Speak to a lawyer

Get legal updates

Enter your email address to receive our monthly Blog Newsletter
The Law Society
Top