In 2018, we reported on Rock Advertising v MWB Business Exchange Centres Limited (“Rock“) – one of that year’s hotly anticipated Supreme Court decisions, which considered the effect of what the Supreme Court (but almost nobody else, at least before its judgment!) called “no oral modification clauses” (or “NOMs”). These clauses, often appearing in contracts under headings like “Variation” or (more aptly) “No Variation”, purport to prevent the terms of a written contract from being varied orally, requiring any variations instead to be in writing (and often signed by party representatives) to be effective.
For some time, there was considerable doubt as to the effect of these clauses – in a previous case conducted by this firm, the Court of Appeal had concluded (obiter) that parties who agree a variation to a contract orally could be deemed also to have varied (orally) the NOM. In 2018, the Supreme Court put this doubt to rest in Rock, deciding that NOMs are in principle binding – in simple terms, if a contract contains a NOM, it can only be varied in writing (of course, it is never that simple, and even within Rock there is reference to an important exception which we won’t dwell on here – please see our original article for discussion of Lord Sumption’s caveat about estoppel).
However, courts in other common law jurisdictions have historically taken different views – and continue to do so. Recently the Singapore Court of Appeal (in Charles Lim Teng Siang v Hong Choon Hau [2021] SGCA 43) favoured an interpretation which creates more latitude for parties to circumvent NOM clauses. The Singapore test is more like the “necessary implication” test – i.e. whether or not the parties actually considered the NOM clause when they were orally varying the contract, if the necessary implication of their substantive oral agreement (taking into account the higher evidential burden in the face of the previously agreed NOM clause) is that they also agreed to dispense with the NOM clause then that will be effective. Courts elsewhere in Asia and Australia have also come to similar conclusions, both before and after Rock.
Back in England, it would appear the law is beyond doubt, for now at least – Rock has been followed in a slew of cases since, including a number of times in the Court of Appeal. But those who are contracting in a variety of jurisdictions and quite possibly under a variety of different governing laws clauses, should beware of overconfidence in Rock and the enforceability of their NOMs, and pay them particular attention when contracting under the laws of other jurisdictions.
About the author(s)
Chris supports our dispute resolution lawyers in providing excellent client service by keeping them abreast of current awareness and legal developments in their practice areas. He also writes client insights and articles on topics of importance in the areas of litigation and arbitration.
Sean Adams is a commercial disputes partner, primarily based in Birmingham. He has a broad commercial practice, with significant experience in a variety of sectors (including within the automotive, aerospace, financial services and renewable energy sectors).
