Can You Prevent a Written Contract From Being Modified by a Later, Oral Agreement?
If you have a written contract, after that contract is entered into, it may seem that the contract is the final, definitive word on the rights, duties and obligations to that contract. But that’s not always the case, because what happens after the contract is entered into, can modify the terms of the otherwise complete and final written agreement.
How Oral Modifications Happen
This often happens when parties, after entering into a contract, orally agree to modify the contract, or to alter its terms. This is often done for ease or speed.
In other situations, parties may alter the terms of a written contract simply based on their course of conduct—if both parties act a certain way, and accept each others actions, even if it contradicts the terms and provisions of the prior written contracts between the parties, it will often be deemed to be a modification of the previously written agreement.
Including No Modification Clauses
You may want to avoid this from happening, and you can, to some extent. You can include in your contracts a provision that says that waiver or modification of a contract’s terms, cannot be done orally—it must be done in writing.
This will prevent a party to the contract from later saying that they are not in breach, because you agreed with them orally, to certain behavior or conduct, even though it was in breach of the written agreement.
Limits to No Modification Clauses
But provisions that restrict or limit subsequent oral modifications to contracts do have their limits. Even when such a provision exists, a court will not allow a party to be deceived, defrauded, or fooled.
In other words, if your contract says that a consulting service is to be performed, and then later, you orally agree to modify the terms of the contract with the consultant, you cannot then later out of the blue turn around and sue the consultant for breach of contract, arguing that your oral modification was invalid.
In other words, you can’t use oral promises or oral modifications to trick or fool or mislead someone. You can’t say “XYZ” is OK even though the contract says “ABC” must be performed, allow the other party to act in that way, and then later sue them because the written contract signed before your oral promise said that “ABC” would have to be performed.
To override a contract’s written terms that say no oral modification will be allowed, the subsequent course of conduct by the parties must show that (1) the parties knew of and complied with the oral modification (2) that the conduct of the parties was consistent with the terms of the subsequent oral modification (which are different than the previously written contractual terms) and (3) That the Defendant (the party being sued for breach of the written contract) had separate, independent consideration for the oral agreement (that is, there is a separate “give and take” for the subsequent oral agreement that does not rely on the consideration from the previously written agreement).
Call the West Palm Beach business litigation lawyers at Pike & Lustig today for help drafting and enforcing your business agreements.