On appeal from: [2016] EWCA Civ 553

This appeal considered whether an agreement in writing which contains an anti-oral variation clause can be varied other than in accordance with the terms of that clause. It also considered whether the Court of Appeal was wrong to follow a previous Court of Appeal decision in which a relevant contrary authority had not been cited, or a later Court of Appeal decision which considered both earlier decisions and rejected that contrary authority but did so obiter. Finally, it considered whether, on the findings of fact by the trial judge, there was a practical benefit which could amount to consideration at law, given the principle that a promise to pay an existing liability cannot amount to good consideration per Re Selectmove [1995] 1 WLR 474.

The Supreme Court unanimously allowed the appeal. The Court held that ‘No Oral Modification’ clauses are common, and considered that the argument for disregarding ‘No Oral Modification’ clauses is that parties cannot agree not to vary a contract orally, because such an agreement would be destroyed automatically upon oral variation. However, the Court held that there are legal systems, including widely used international codes, which impose no formal requirements for the validity of contracts and which yet give effect to ‘No Oral Modification’ clauses, suggesting that there is no conceptual inconsistency between a general rule permitting informally created contracts and a specific rule requiring variation to be agreed in writing. The Court concluded that parties who agree an oral variation in spite of a ‘No Oral Modification’ clause do not necessarily intend to dispense with that clause; rather, the natural inference from a failure to observe a ‘No Oral Modification’ clause is not that the parties intended to dispense with it, but that they overlooked it.

For judgment, please download: [2018] UKSC 24
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (1 Feb 2018 morning session) (1 Feb 2018 afternoon session)