Making changes or variations to a contract
Thu 21 September 2023
Changing a contract
Contract variations are very common and can be a complex and risky area. Avoiding legal disputes which go anywhere near a court or tribunal is the best approach.
Our advice is to think about the likelihood of changes when the contract is negotiated, plan ahead and stay vigilant about the ways contracts can end up being changed inadvertently or by being passive.
We draft, advise on and review contracts and can guide you through any necessary variations to a contract or concerns about a potential dispute arising.
Key principles which apply to contractual changes
It’s important to always bear in mind :-
- No unilateral changes - with any contract, the existing terms cannot be varied without the consent of both parties. Failure to recognise this can mean you end up in breach of contract. Consent can sometimes be implied as well as express (see below).
- Is there a formal contractual process for agreeing variations? - Many contracts provide a strict process for any variations to be agreed and that the contract can only be varied in a formal way. If this clause is not included, be aware that contracts can very easily end up being varied by an exchange of emails or text messages or even verbal communications.
- Variations are possible by conduct - Whilst in UK law silence does not constitute acceptance, variations can occur based on no express agreement to vary but where variation occurs by conduct.
- Be wary of waiving contractual rights - quite often with contracts, payment terms are not complied with, there is a danger that those terms may not be enforceable in the future. A method of protecting your interests if you allow a short term change to a contract is to make it clear in writing, that you have not agreed to vary the contract and that you are not waiving your rights to ensure strict compliance going forward.
Other reasons a contract may need to be varied
Not all reasons for changing a contract are related to giving 1 party a commercial or other benefit. Sometimes, contracts need to be changed for more neutral reasons, and in this situation, whilst the overall position remains that mutual consent is needed, in reality, neither party should really object. Changes of this type include :-
- Where laws or regulations have changed.
- Where there is an obvious error in the contract
Variations to building contracts
Changes are particularly common and often problematic and the cause of disputes in building and construction contracts. With some scale building contracts such as extensions or loft conversions or renovations, it is important to ensure your contract is clear about what is included, usually with a specification and a process for agreeing what will constitute extras in the project.
Changes to employment contracts
Employers often need flexibility in being able to make best use of their workforce. However, seeking to impose changes, whether to job role, place of work or even pay, carry great risks for employers as these types of changes, where not agreed, are highly likely to be fundamental breaches of contract and give the employee the right to resign and if employed for more than 2 years, to claim constructive dismissal.
Employers can somet8me avoid difficulties and disputes relating top variations by including ceratin terms in policies and procedures which are expressly stated to be not part of the main employment contract and where the employee agrees at the outset of employment that changes can be unilaterally made by the employer.