Template:Rock advertising

Rock Advertising Limited v MWB Business Exchange Centres Limited concerned a non-oral modification clause.

Rock Advertising Ltd rented serviced office space from MWB. being a fledgling company, it struggled to make ends meet and became significantly behind in its licence payments to MWB. Rock proposed a rescheduled series of licence payments which, when accrued interest was considered, would amount to less overall money being paid to MWB than was agreed in the contract. A credit officer at MWB agreed the variation over the phone, but then her line manager rejected that. MWB locked Rock Advertising Limited out of the premises.

Rock sued, citing a binding amendment to the licence agreement. MW be offended citing a no oral modification clause in the licence agreement which meant the the oral conversation between the credit officer and rock did not amend the contract.

Anxious to avoid addressing the “difficult” question of whether a unilateral reduction in the net value of Rock’s payment obligations was accompanied by consideration, the supreme court focused squarely on the no oral modification clause.

Could it really work? Surely, contracting merchants are sovereign: they must be free to vary their affairs in a way the common law. If the evidence is clear that they agree, and there is consideration, it doesn't matter how they agree. Could contracting parties really double-entrench themselves?

The Court of Appeal thought not. A fellow can agree whatever he chooses, however he chooses – in writing, orally or by conduct. Following that general principle, a “no oral modification” clause (a “NOM” clause) would not prevent him later making a new oral contract to vary the original contract.

Good, that’s that all sorted and we can now all move on to more important issues of the d —

BUT WAIT. The Supreme Court thought differently. Lord Sumption dismissed this “fallacious” reasoning: a chap’s autonomy operates until he has made his contract; thereafter only as far as the original contract allows.

“The real offence against party autonomy is the suggestion that they cannot bind themselves as to the form of any variation, even if that is what they have agreed.”

But what if contracting parties have relied on an oral variation in good faith, and by conduct abided by it for a good period? As have so many of his brother judges in the past, here Lord Sumption looked lovingly towards the courts of chancery in a clean-handed defendant’s aid. A wronged party might seek to argue an equitable estoppel. However, the scope of this estoppel will be limited:

“... at the very least, there would have to be some words or conduct unequivocally representing that the variation was valid notwithstanding its informality and something more would be required for this purpose than the informal promise itself.”

Common sense has taken a bit of a battering, but this is all good news for we learned wordwrights who can now be prayed upon to paper otherwise unnecessary amendment agreements for merchants to vouchsafe their obvious commercial intent.