No oral modifications

The relevant case, Rock Advertising Limited v MWB Business Exchange Centres Limited, involved a license agreement which the parties (with the required authority) had attempted to amend orally. The issue on appeal was whether a 'no oral modification' clause was effective to prevent oral variations of the contract. In allowing the appeal, the Supreme Court ruled in favor of contractual certainty over contractual flexibility. The court did, however, provide that in such situations an argument in estoppel may be relevant if a party can show that it relied on the representations of its counterparty to its detriment. 

The ruling is another example of why Danish businesses operating under English law agreements should ensure that they read and understand the terms of their contractual agreements as the English courts are likely to favor an interpretation that gives legal effect to the agreed contractual terms.

From a practical perspective, our advice is to:

• inform your employees who have day-to-day responsibility over a contract to make any amendments in accordance with any required contractual formalities; 
• or if flexibility is required to amend terms orally, replace the 'no oral modifications' clause with a clause providing that oral amendments can be made but only by certain individuals with the required level of authority.