Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018]
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Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24 is an important contract law case concerning consideration and estoppel. The case was decided by the Supreme Court on the effectiveness of "no oral variation" clauses, which provide that any amendments or waiver in relation to the contract must be in writing.
Rock Advertising Ltd (Rock) and MWB Business Exchange Centres Ltd (MWB) entered into a licence agreement for office space. Disputes arose due to rent arrears incurred by Rock, leading to MWB locking them out and issuing notice of termination as per the contract terms. Rock claimed an oral agreement with MWB to reschedule payments, backed by a payment of £3500. The crux of the matter was the enforceability of this oral variation in light of a "no oral modification" clause in the written agreement.
The Court of Appeal ruled in favour of Rock, asserting that the "no oral modification" clause did not prevent variations. They emphasised party autonomy, stating that subsequent variations could override the written clause. The court found the oral agreement binding as long as Rock continued making payments.
The Supreme Court overturned the Court of Appeal's decision and held in favour of MWB. The Court upheld the effectiveness of "no oral modification" clauses, emphasising the importance of honouring written agreements. Lord Sumption rejected the argument that enforcing such clauses undermines party autonomy, asserting that parties can willingly limit their autonomy through contractual terms.
The Court clarified that oral variations, when the contract includes a "no oral modification" clause, are generally invalid. Lord Sumption highlighted the risks associated with not following formalities, cautioning that a party might act on the varied contract but find it unenforceable. However, the Court did not extensively address the consideration issue but acknowledged the difficulty in establishing consideration for a variation, hinting at potential reexamination of Williams v Roffey Bros & Nicholls [1989].
The Court mentioned that estoppel might preclude a party from relying on a "no oral modification" clause if the other party reasonably relied on conduct inconsistent with the clause. However, the Court set a high bar for establishing estoppel in such cases, requiring unequivocal representations that the variation was valid. The Court also drew parallels with entire agreement clauses, underscoring the need to hold parties to their agreement's terms to prevent disputes over prior oral representations.
The decision reinforces the significance of honouring written agreements and "no oral modification" clauses. It establishes a clear stance on the enforceability of such clauses, highlighting the risks associated with informal variations. The case also prompts considerations regarding the required consideration for variations and the potential role of estoppel in specific circumstances.
Rock Advertising Ltd (Rock) and MWB Business Exchange Centres Ltd (MWB) entered into a licence agreement for office space. Disputes arose due to rent arrears incurred by Rock, leading to MWB locking them out and issuing notice of termination as per the contract terms. Rock claimed an oral agreement with MWB to reschedule payments, backed by a payment of £3500. The crux of the matter was the enforceability of this oral variation in light of a "no oral modification" clause in the written agreement.
The Court of Appeal ruled in favour of Rock, asserting that the "no oral modification" clause did not prevent variations. They emphasised party autonomy, stating that subsequent variations could override the written clause. The court found the oral agreement binding as long as Rock continued making payments.
The Supreme Court overturned the Court of Appeal's decision and held in favour of MWB. The Court upheld the effectiveness of "no oral modification" clauses, emphasising the importance of honouring written agreements. Lord Sumption rejected the argument that enforcing such clauses undermines party autonomy, asserting that parties can willingly limit their autonomy through contractual terms.
The Court clarified that oral variations, when the contract includes a "no oral modification" clause, are generally invalid. Lord Sumption highlighted the risks associated with not following formalities, cautioning that a party might act on the varied contract but find it unenforceable. However, the Court did not extensively address the consideration issue but acknowledged the difficulty in establishing consideration for a variation, hinting at potential reexamination of Williams v Roffey Bros & Nicholls [1989].
The Court mentioned that estoppel might preclude a party from relying on a "no oral modification" clause if the other party reasonably relied on conduct inconsistent with the clause. However, the Court set a high bar for establishing estoppel in such cases, requiring unequivocal representations that the variation was valid. The Court also drew parallels with entire agreement clauses, underscoring the need to hold parties to their agreement's terms to prevent disputes over prior oral representations.
The decision reinforces the significance of honouring written agreements and "no oral modification" clauses. It establishes a clear stance on the enforceability of such clauses, highlighting the risks associated with informal variations. The case also prompts considerations regarding the required consideration for variations and the potential role of estoppel in specific circumstances.
