MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24

KEY POINTS

• When parties agree on a “No Oral Modification” (NOM) clause, it does not mean that oral variations to the contract are forbidden.
• A NOM clause merely renders them invalid and such oral variations do not necessarily contravene the said clause.

FACTS

• Rock Advertising (“Rock”) entered into a licence agreement with MWB Business Exchange Centres Ltd (“MWB”) to occupy one of the latter’s office spaces for a fixed term of 12 months.
• Their licence contained a “No Oral Modification” (NOM) clause which provides that any variations thereto must be made in writing and signed by the parties before they take effect.
• When Rock accumulated arrears of licence fees, it proposed a revised schedule of payments to MWB which consisted of the deferral of certain payments and the spreading of the arrears over the remaining licence term. In effect, the revised schedule was worth slightly less than the original terms.
• Rock claimed that MWB agreed to the revised schedule during a phone call which MWB denied.

COMMENTARY

• The rigid construction of NOM clauses is intended to prevent parties from undermining written agreements through informal means.

NOTES

• As the oral variation was deemed invalid, the Court found it unnecessary to deal with the issue on consideration.
• However, the lower courts – Central London County Court and Court of Appeal – both agreed that the variation in this particular case was supported by consideration in the form of “practical advantages to MWB."