In a case described by the Supreme Court as raising “truly fundamental issues in the law of contract”, it has clarified that no-oral modification (NOM) clauses (which impose specific formalities for varying a contract) are effective to prevent the oral variations from being effective.
The case concerned purported amendments orally agreed during a telephone conversation. The contract had a NOM and as such the Supreme Court held that the oral variation was ineffective.
The decision represents a change in direction from previous case law which had suggested that parties have the autonomy to vary contractual arrangements orally even where a NOM clause is in place. In any event, where parties wish to vary an existing agreement, the safest and most sensible approach remains to ensure that the variation is recorded in writing.