Variation Clause
Once contracts are signed and agreed or finalised orally they can’t be changed or amended, unless the amendment is agreed.
That's one of the features of contracts that makes contracts, contracts.
They're legally binding.
Parties aren’t entitled to insist on a different performance of the legal obligations than those agreed to in the contract.
That would defeat the purpose of the legally binding contract that had just been agreed, and be an anticipatory breach of contract.
Another - new - contract is required to change an existing contract: known as a variation.
There's no such thing as a "one-way change" to a contract which is OK just because the other party would benefit from the change. That would be delivering a standard of performance of the contract over and above that which is required. Which may at law be a breach of contract and lead to a claim for damages in business litigation.
Informal Variations of Contracts
There are no specific requirements to form legally being contract, or vary it (other than in limited cases, such as selling land) - but still the legal requirements to make the contract must be satisfied.
Variations can be made informally or inadvertently.
Variation clauses establish an agreed method by which variations are agreed (they're sometimes called "contract modification clauses").
In the absence of a variation clause, a variation to a contract can happen any way that a contract can be made. It can be varied:
- using a method that is different to how the original contract was agreed
- in writing using email, SMS message, WhatsApp, Skype message, LinkedIn Post, Twitter or any other means of communication or passing a note on old-fashioned paper
- in a conversation over the telephone, Telegram or Skype
- by conduct or behaviour of the parties
Restricting Variations
Variation clauses pre-agree the method(s) which the parties may vary the contract.
Even where contracts contain clauses which allows one party to vary the terms of the contract unilaterally, that too has its limits. The variation can’t make a new contract altogether completely different to that which was already in force.
"as the parties may agree"
You may have seen clauses in a contract which state that the contract may be amended, varied and/or changed “as the parties may agree”.
It's redundant. As a basic principle of law, the parties are able to agree to change their agreement at any time.
All the variation clause does is impose a restriction on how it may be amended.
Are variations clauses enforceable?
In the same way that parties may agree to bind themselves to any particular contract, the parties are also entitled to agree methods by which they may not change a contract.
The law gives effect to contractual provision requiring specified formalities to be observed for a variation to an existing contract.
The freedom to make contracts on any terms the parties may choose operates up to the point when the contract is made. After that it can only be changed to the extent that the contract allows: Rock Advertising Limited v MWB Business Exchange Centres Limited (2018).
Variation Clause: Example
Except as expressly provided in this Agreement, no variation of this Agreement shall be effective unless it is in writing and signed by the parties (or their authorised representatives).
If that sort of clause appeared in a contract, trying to vary it in a conversation will not be legally effective. Oral modifications are excluded.
Related: Boilerplate Clauses