The defendant company entered into a licence agreement to lease premises managed by the claimant company. When the defendant fell into arrears on licence payments and other charges the claimant exercised its contractual right to exclude the defendant from the premises and terminate the agreement. The claimant issued proceedings for the arrears plus compensatory damages for other losses. The defendant counterclaimed for damages for what it submitted was its wrongful exclusion from the premises, contending that it had entered into an oral agreement with the claimant to reschedule its licence payments and made a payment the same day in accordance with the revised payment schedule. The judge gave judgment for the claimant on its claim and dismissed the counterclaim, holding that (i) the revised payment schedule amounted to good consideration for the oral variation but (ii) clause 7.6 of the original agreement expressly prevented an oral renegotiation of the fee payment structure.
On the defendant’s appeal—
Held, appeal allowed. A contract containing an anti-oral variation clause was capable of variation by the parties to the contract by oral agreement or by conduct. The principle of freedom of contract entitled parties to agree the terms of their choice subject to public policy limitations. There had been an oral agreement in the present case to vary the terms of the original agreement. Accordingly, the judge had fallen into error in holding that clause 7.6 precluded any variation of it other than in writing and in accordance with its terms. The judge had been correct to find that the payment by the defendant and the promise to make further payments conferred a practical benefit on the claimant which amounted to sufficient consideration for the oral variation which would remain binding as long as the defendant continued to make the scheduled payments (paras 34–36, 49, 63, 65–68, 70, 93).
Clifford Darton (instructed by Edward Harte LLP) for the claimant.
Henry Hendron (instructed directly) for the defendant.