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News and Opinion from Edward Harte LLP

Supreme Court success for local firm Edward Harte: a legal precedent you need to know!

MWB Business Exchange Centres -v- Rock Advertising Limited [2018] UKSC 24.

Samantha Dawkins from Brighton-based solicitors Edward Harte has successfully guided this case through to Appeal at the Supreme Court. The case which was unanimously allowed with Judgment being handed down on 16 May 2018.

“Modern litigation rarely raises truly fundamental issues in the law of contract. This appeal is exceptional. It raises two of them,” said Justice of the Supreme Court Lord Sumption of the case.

Why the case came to be

MWB operate serviced office spaces and Rock Advertising took a Licence Agreement to use some office space. Rock Advertising fell into arrears with the Licence fee and proceedings were issued to recover the arrears.

In the Central London County Court, His Honour Judge Maloney found that the parties had entered into an oral agreement with a revised payment schedule for the repayment of the arrears. However, it was held that in accordance with a clause in the Licence Agreement, oral variations to the contract were not permitted unless they were agreed in writing and signed by both parties. The Judge determined that MWB were not bound by the oral agreement in the clause.

Additionally, a previous payment of £3,500 made by Rock Advertising to MWB was not considered to be detrimental because Rock Advertising were simply honouring their existing obligations and would have been liable to pay that sum in any event.

Rock Advertising appealed to the Court of Appeal and were successful. Following that decision MWB appealed to the Supreme Court.

The outcome

The Appeal Hearing at the Supreme Court took place on 1st February 2018 and was unanimously allowed, with Judgment being handed down on 16th May 2018.

It was decided that “no oral modification clauses do not prevent parties from varying a contract; they simply provide for the method by which any variation needs to follow in order to be effective”.

What does this mean for businesses?

It provides for certainty. If you have a clause in your contract or terms of business which require any variations to be made in writing, then an oral variation will not be legally binding. One possible exception is that an oral variation maybe be upheld if the parties agreed to vary or abandon the “no oral modification” clause.

Clifford Darton and Sally Blackmore from Ely Place Chambers were Counsel in this case.

For further details please contact Samantha Dawkins at Edward Harte Solicitors by email: sdawkins@edward-harte.co.uk,or call 01273 662756.

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