Have you ever seen this type of provision?

Any amendment to this contract must be made in writing and signed by both parties.

It is standard procedure when drafting contracts to include a template clause that requires any future amendments to a contract to be made in writing and signed by the respective parties. But in practical terms such a clause may have only limited impact in certain circumstances, as a recent case in English revealed. In Globe Motors Inc & others v TRW Lucas Varity Electric Steering  Ltd  the English Court of Appeal stated that even if such a clause is agreed, an agreement can still be changed orally.  It was affirmed that there was no common law rule generally precluding oral agreements and this fact was not negated by an amendment clause requiring writing.

The lesson to be learned is that we should always be viligant in monitoring contract performance. A template clause stating that “no amendments are valid unless in writing and signed” is still advisable but it must be supported and supplemented by checking and control of all communications and specific authorised contact persons being nominated for each party.

In addition, parties need to train their personnel to ensure that they become aware of how easy it can be to make contracts or contract amendments. Personnel should be made to understand the importance of strict contact mangement during implementation. Channels of contact and communication should be fixed. Moreover, any agreements, whether oral or otherwise,  should always be made expressly subject to final written, signed confirmation by the parties.

Remember for your next contract:

The pen may be mightier than the sword – but the spoken word can still be a decisive weapon, too.