Abstract:
It is not uncommon for a written contract to contain a term which seeks to limit the form in which the parties may vary their agreement. Such terms are only limited by the ingenuity of their drafters: the parties could conceivably agree to a clause that states that the parties may only vary their contract by deed, or on vellum, or at the top of Mt Everest. Usually, however, such clauses are not so exotic and instead state that the parties may only vary their written agreement in writing (it may also require the parties to sign the written variation). For example, in Geo H Scales Ltd v Far Eastern Shipping Company Public Ltd the clause in question read: Any alterations to this Agreement mutually agreed upon are valid if they are made in written form and signed by the persons duly authorized… Since this clause precludes the parties from orally varying their contract, such clauses are typically referred to as “No Oral Modification Clauses” (NOMs). When the parties agree to a NOM a number of questions arise: if the parties do agree to vary their written agreement, but their variation does not comply with the NOM, does their variation have any legal effect? Does a NOM act as a privately agreed-to formality requirement in the same way as statutorily imposed formality requirements do? Or are the parties free to change their minds and agree to vary their agreement orally irrespective of the presence of a NOM?