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Can I Vary Terms of a Contract After I Have Agreed Them?

Aug 01, 2016
In short, yes. Whether you intended this to be the case however is another matter. From the outset it is quite possible that you would have agreed terms to a specific contract to identify what is required of each party, when and what for in return. However, the business landscape is forever changing, so what was agreed may not always reflect any changes or points that were covered in the first instance – consider the impact of Brexit for example. 

When parties both agree to vary a contract or terms formally, this is easily identified as having been varied. However, it may be the case that this is done in a rather informal manner, not necessarily in accordance with what the contract says. What then, are considered to be the terms of the agreement if such variation does not comply? Standard boilerplate clauses in a contract that deal with variation indicate that variation cannot be made unless in writing and signed by both parties or their authorised representative. However, as you can imagine, often changes are made in the contract via less formal means, such as a quick email between the parties outlining a variation of some kind. Strictly speaking, this does not comply with the variation clauses in any agreement, but parties treat it as such.   

Two recent cases by the Court of Appeal suggest that actually, if it can be shown that the parties then relied on those emails and changed their conduct, it can be sufficient to prove that variation to the contract was made, even if it was not formally part of what was required. Despite this, it doesn’t mean that you can ignore the variation clause and keep it out of contracts – it still has its purpose. The court will always look at the variation clause as it can provide good evidence that you did not mean to vary the contract. The onus of course will be on the party who seeks to rely on such a clause that the contract was properly varied. 

What is key however is that where a variation is made, that is properly recorded, as proper contract management. This will help minimise any legal risk in the future, but as always, the best advice is where you are not sure if it has been properly recorded or you need advice on contract management, always take advice.

Nicola Lucas

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Nicola Lucas

Nicola is a member of our Business Law Team handling all the commercial requirements of her clients such as shareholder agreements and negotiating on commercial ...

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