No amendment, no surprises?
“No amendment” clauses, which typically require amendments to a contract to be made in writing and signed by the parties, are common in construction contracts. In the recent case of C&S Associates UK v Enterprise Insurance Company, the courts considered whether an exchange of emails was sufficient to fulfil the requirements of such a clause and amend the contract.
C&S provided motor insurance claims handling services to Enterprise. The contract contained a no amendment clause drafted in fairly typical terms, requiring any amendment to be in writing and signed by each party. During the contract term, C&S sought to agree an increase in its fees and to introduce a minimum term through an exchange of emails with Enterprise. A dispute arose which required the court to decide whether the email exchange validly amended the contract in light of the no amendment clause.
The court found that it did. Whilst the clause did introduce a degree of formality into variations to the contract which was sufficient to oust any amendments agreed orally or by informal unsigned written documents, it did not expressly require that amendment be agreed on hard copy paper documents or signed in manuscript. Applying the principle that binding contracts can be concluded even though it is understood that a formal document will be executed subsequently, the emails constituted a valid amendment. The parties’ respective email signature blocks were sufficient to demonstrate that the amendment had been “signed”.
This decision will come as a surprise to some who may have assumed that such a “no amendment” clause means it is not possible to agree a variation to the contract terms unless a paper document is physically signed. It is interesting to consider what the court would have decided if the amendments had been agreed by a series of text messages or if the emails did not include signature blocks – arguably these would not have been “signed” and so would not have been valid amendments. Greater protection could be offered by amending the wording of the no amendment clause to specify that signatures must be in manuscript and on paper. In any event, parties should be aware that agreements subsequently reached in email correspondence during the course of the works may vary the terms of a carefully negotiated contract.
This article was written by James Worthington. For more information please contact James on +44 (0)20 7427 1070 or firstname.lastname@example.org
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