determined that the revised and rescheduled rent proposal amounted to an “oral agreement”between the parties which varied the terms of the underlying licence agreement and amounted to an agreement to dispense with the No Oral Modification clause. In reaching its decision, the Court of Appeal emphasised the importance of party autonomy noting that parties should be able to contract out of requirements stipulated in an underlying agreement. Although the arrears where relatively modest (approx. £12,000), MWB appealed against the Court of Appeal’s decision. The Supreme Court’s Decision On appeal, the Supreme Court unanimously allowed the appeal. The Supreme Court determined that (i) the No Oral Modification clause in the licence agreement was legally effective and (ii) the parties had not impliedly dispensed with compliance through their oral communications. Lord Sumption gave the leading judgment. He concluded that the law should take the following approach: firstly, No Oral Modification clauses which specify formalities to be observed for a variation are, and should be, given effect by English Law; and secondly, once a contract is concluded, party autonomy is only permitted “to the extent that the contract allows“. In reaching this decision, Lord Sumption confirmed that there is no public policy reason why No Oral Modification clauses should not be upheld by the courts and that they neither frustrate nor contravene any specific policy of law. He referred to the fact that often statute prescribes the form of an agreement. For example, section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires agreements for the sale of property to be in writing and signed by the parties. Therefore, there was no good reason why contracting parties should not adopt a similar requirement by agreement; in effect creating their own private law. This is the supremacy of contract. Lord Sumption reasoned that No Oral
Modification clauses provide commercial parties with legal certainty and avoid disputes about the validity of any variation (and its exact terms). They also provide a mechanism for organisations to monitor their own internal rules limiting the authority to agree variations. The counterpoint to the argument for supremacy of contract is that parties remain autonomous to reach agreements and which may have the effect of undoing a previous bargain. Lord Sumption gave this short shrift, describing party autonomy as “a fallacy“. He said “the real offence against party autonomy is the suggestion that [parties] cannot bind [themselves] as to the form of any variation“. Many other jurisdictions uphold such clauses, whilst also imposing no formal requirements for the validity of commercial contracts. Whilst the Supreme Court’s decision was unanimous, Lord Briggs gave different reasons. While Lord Sumption’s view was that it is simply not possible to orally amend a contract where a No Oral Modification clause exists, Lord Briggs considered that parties should have capacity to orally agree to amend a contract in instances where the parties expressly comment on the No Oral Modification clause (where one exists). In his words, a No Oral Modification clause “continues to bind until all parties have expressly (or by strictly necessary implication) agreed to do away with it“; an argument in favour of the supremacy of party autonomy. However, Lord Briggs was in the minority. In reaching its decision, the Supreme Court