Disputes 101 - Boilerplate provisions and how not to get scalded

Entire agreement and non-reliance

Entire agreement wording is there to limit the parties’ exposure to what’s been agreed in the written contract. Or, as one judge put it, to stop a party “thrashing the undergrowth” in the hope of finding a chance remark having the effect of a collateral warranty. Generally speaking, it works. One risk is failing to cross-refer to something that you do want to form part of the contract. 

Non-reliance wording (which quite often forms part of an entire agreement provision) is aimed at excluding liability and remedies for pre-contractual misrepresentation. Again, generally speaking, it works.

No oral variation / no oral modification 

No oral variation wording typically says that any amendments to a contract must be made in writing and signed by both parties. The aim is to help prevent misunderstandings and disputes over whether a change to a contract was agreed upon and, if so, the specifics of that change. The UK Supreme Court upheld the validity of these provisions (also known as “no oral modification” clauses) in Rock Advertising v MWB. Parties are therefore bound by the terms that they agree to, including any stipulations on how variations must be made. It is vital therefore to pay attention to any clauses that you have in your contracts that require any formalities to be adhered to for variation and make sure you are doing what is required.

A no oral variation clause may itself be overcome by an estoppel but the Supreme Court gave no detailed guidance on when. What it did say was that:

• There must be an unequivocal representation (by words or conduct) that what is alleged to be a variation is valid notwithstanding its informality.
• This must be done by reference to “something more” than what is alleged to constitute the variation. 

Although an email will likely satisfy an “in writing” requirement, the specific circumstances will play a significant role in determining whether an email is sufficient to satisfy the requirement that an amendment be “signed by both parties”. 

Electronic signatures can be legally binding, and there is case law that suggests that an email could satisfy the requirement for a signed writing, provided it includes an electronic signature and meets the necessary formalities. However, the specific terms of the clause and the context of the variation are crucial in determining whether an email would be always be sufficient.

No waiver

Our previous blog post in this series, “Disputes 101 – What can’t you agree to do in your contract?”, explains the basics of no waiver clauses. To re-cap:

• A waiver is where a party forgoes a contractual right.
• No waiver clauses try to prevent accidental waivers of those rights. 

In Tele2 v Post Office, the Court of Appeal held that the Post Office had waived its right to terminate because it continued to perform its obligations under the contract for nearly a year after Tele2’s breach. The court reached that decision despite the fact there was a no waiver clause in the contract which stated: 

“In no event shall any delay, neglect or forbearance on the part of any party in enforcing (in whole or in part) any provision of this Agreement be or be deemed to be a waiver thereof or a waiver of any other provision or shall in any way prejudice any right of that party under this Agreement”.

There is a suggestion, in at least one recent case, that, in the light of Rock v MWB, a “no waiver” may be effective where there is a formality stipulated (e.g. that the waiver being writing) and that is not adhered to. The provision in the Post Office case had no such requirement.

Here, then, are some things to bear in mind. 

• Check your agreements and any related documents to see if a waiver has to comply with specified formalities to be effective (e.g. “in writing”).
• Be careful about how emails are drafted so that you don’t inadvertently waive your rights by, say, giving the party in breach more time to correct that breach via email. Remember that emails have been construed as waivers in writing. 
• Be specific about which clause any waiver relates to so that you do not accidentally waiver more than you intend to.
• Ideally act on another party’s breach as quickly as possible, but if you need more time use reservation of rights language.
• Make sure you act consistently with any reservation of rights language or decision to terminate, otherwise you risk losing your rights.