Difference between revisions of "Rock Advertising Limited v MWB Business Exchange Centres Limited - Case Note"

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{{cn}}'''Headnote''': “[[Unless otherwise agreed in writing|Unless otherwise agreed ''in writing'']]” is not as meaningless as “[[unless otherwise agreed]]”.
 
{{cn}}'''Headnote''': “[[Unless otherwise agreed in writing|Unless otherwise agreed ''in writing'']]” is not as meaningless as “[[unless otherwise agreed]]”.
  
{{cite|Rock Advertising Limited|MWB Business Exchange Centres Limited|2018|UKSC24}} ([https://www.supremecourt.uk/cases/uksc-2016-0152.html  transcript])  
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{{cite|Rock Advertising Limited|MWB Business Exchange Centres Limited|2018|UKSC|24}} ([https://www.supremecourt.uk/cases/uksc-2016-0152.html  transcript])  
  
 
In which the Supreme Court dealt unsatisfactorily with two basic issues one would like to think were well and truly settled law before now, getting one wrong (in your humble correspondent’s unworthy opinion) and deciding therefore that it did not need to answer the other. The issues were:  
 
In which the Supreme Court dealt unsatisfactorily with two basic issues one would like to think were well and truly settled law before now, getting one wrong (in your humble correspondent’s unworthy opinion) and deciding therefore that it did not need to answer the other. The issues were:  

Latest revision as of 05:25, 12 August 2019

The Jolly Contrarian’s court reporting service

Common law | Litigation | Contract | Tort Index of Cases

Headnote: “Unless otherwise agreed in writing” is not as meaningless as “unless otherwise agreed”.

Rock Advertising Limited v MWB Business Exchange Centres Limited [2018] UKSC 24 (Let me Google that for you) (transcript)

In which the Supreme Court dealt unsatisfactorily with two basic issues one would like to think were well and truly settled law before now, getting one wrong (in your humble correspondent’s unworthy opinion) and deciding therefore that it did not need to answer the other. The issues were:

  1. Whether a contractual term that an agreement may only be amended in writing signed by the parties prevents parties effectively amending the contract orally, by morse code or by winking at each other[1];
  2. Whether an amendment to substitute an obligation to pay a lot of money with an obligation to pay less money is supported by consideration.

No oral modification clauses

Brand new nonsense from the learned souls in the Supreme Court. NOM, NOM, NOM.

This time, concerning no oral modification clauses — hitherto understood by all to be harmless fluff injected into the boilerplate by unthinking clerks, and understood by all (including the Court of Appeal) to carry no forensic content at all, wherein parties — and let’s be honest here, it’s really just their lawyers — vainly purport to require amendments to be documented in a written agreement. For who else would benefit from such a tiresome formal stricture?

Anyway, the Supreme Court went into Law Society shop steward mode:

Rock Advertising Limited v MWB Business Exchange Centres Limited concerned just such a non-oral modification clause. Could it really work? Surely, a merchant’s freedom to vary his affairs in a way the common law decrees effective is paramount. Can such a provision really double-entrench itself?

The Court of Appeal thought not. A fellow can agree whatever he chooses, however he chooses – in writing, orally or by conduct[2]. 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 has disagreed. Lord Sumption (for it was he) dismissed this “fallacious” reasoning: a chap’s autonomy operates until he has made his contract; thereafter only as far as the original contract allows.

Quoth milord: “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.

Consideration for amendments

Lord Sumption ducked this one, by giving a bad decision on NOMs.

“That makes it unnecessary to deal with consideration. It is also, I think, undesirable to do so.The issue is a difficult one. The only consideration which MWB can be said to have been given for accepting a less advantageous schedule of payments was (i) the prospect that the payments were more likely to be made if they were loaded onto the back end of the contract term, and (ii) the fact that MWB would be less likely to have the premises left vacant on its hands while it sought a new licensee. These were both expectations of practical value, but neither was a contractual entitlement.”

See also

References

  1. Neither Morse code nor winking are strictly part of the ratio decidendi but I maintain they are implied.
  2. Or in pictures