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Is talk cheap in commercial contracts?

So called “Anti-oral variation clauses” are used in commercial contracts to prevent any verbal changes being made after the contract has been agreed and signed by those involved.

They are commonly included in commercial contracts, often as boilerplate provisions which are often not given a huge amount of attention.

Essentially, the clause exists to limit the effectiveness of any subsequent amendments made either verbally, or by way of conduct.

Imposing these types of formalities may be attractive to parties who want to prevent themselves being bound by informal verbal exchanges or ad hoc oral agreements, without more senior or director level approval.

The widespread commercial use of these clauses and their enforceability has been unclear until recently.  The Court of Appeal has confirmed that anti-oral variation clauses do not work.  However, there are two useful practical benefits to including them which mean their role in a commercial contract should not be completely dismissed:

  • Including such a clause in a contract sends an encouraging message that any changes should be properly documented in writing as a matter of best practice.  It also helps to avoid any issues arising in proving the existence and precise terms of any verbal amendments.
  • An anti-oral variation clause in a contract increases the weight of evidence needed to support a claim that the contract has been verbally changed.

For more information on this, advice on any aspect of a business or commercial dispute, please contact a member of our commercial disputes team or call us on 0115 9 100 200.

This is not legal advice. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.

Posted on March 28, 2017

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