Contracts should always contain a “non-variation” clause providing that no variation of the agreement is of any force or effect unless it is in writing and is signed by all parties.

A recent High Court case resulting from a property dispute shows why.

 

Landlord v Tenant: The restaurant that fell on hard times …..

A restaurant owner, who rented premises in terms of a lease agreement containing a standard non-variation clause, fell on hard times and ran up rental arrears.

The landlord cancelled the lease and gave written notice to the tenant to vacate the premises.

When the tenant refused to vacate, the landlord asked the Court for an eviction order.

The tenant’s defence was that it had verbally agreed with the landlord to pay a reduced rental (set at 25% of daily takings), that it had complied with this alleged “compromise agreement”, and that it should not therefore be evicted. It argued (citing public policy considerations amongst other legal principles) that an oral agreement should suffice in the particular circumstances.

….. and the certainty principle

But to no avail. Commenting that when parties to a contract impose restrictions on their own powers to vary the contract “they do so to achieve certainty and avoid later disputes”, the Court granted the eviction order and gave the tenant 5 days to vacate the premises.

 

Protect your position

1. A non-variation clause, worded correctly to suit your particular needs, is essential. Without it, you could end up arguing endlessly (and expensively) in a succession of courts about who agreed what, with whom, and when.

2. Comply strictly with the clause, no matter how great the temptation may be to accept verbal undertakings and agreements from the other party. This is a case where compliance with formalities is essential.

3. Even if by some mischance your agreement allows verbal amendment or cancellation, still reduce everything to writing to avoid uncertainty and dispute down the line.

 

P.S. Beware electronic amendment!

Next month we’ll look at a related danger – that of inadvertently concluding, amending and/or cancelling agreements by email or other electronic messaging, which can amount to both “written” and “signed” agreement.