Beyond the Written Word: Exceptions to the Enforceability of No Oral Modification Clauses
Introduction
A ‘No Oral Modification’ (NOM) clause is a contractual term that mandates any changes or amendments to a contract must be made in writing and signed by the parties. These clauses are standard across a wide spectrum of commercial agreements — including joint ventures, shareholder agreements, construction contracts, and financial arrangements — and serve the important purpose of promoting clarity, minimizing disputes, and documenting consensus. However, in today’s globalized and fast-moving commercial environment, where business negotiations and transactions often happen informally or under pressure, parties may mutually agree to deviate from strict contractual procedures. This raises the complex question: Can a NOM clause be waived or overridden by subsequent oral agreement or conduct?
In this article, we analyze the Indian legal framework on NOM clauses under the Indian Contract Act, 1872, review persuasive common law precedents from the UK and Singapore, and explore established exceptions that can render a NOM clause unenforceable — such as waiver, estoppel, and subsequent conduct. We also examine practical implications for contract drafters, corporate counsel, and litigators handling contract enforcement and dispute resolution.
Legal Recognition and Enforceability of NOM Clauses in India
In India, contracts are primarily governed by the Indian Contract Act, 1872. Though the statute does not explicitly address No Oral Modification clauses, the general principles of contract law provide guidance. Section 10 outlines the essentials of a valid contract, including free consent and lawful consideration. Section 62 specifically allows for novation, rescission, and alteration of a contract by mutual agreement. It follows that if parties can legally amend a contract, they may also agree — expressly or impliedly — to bypass a NOM clause.
Indian courts have generally held that contracts, even if written, can be altered orally unless the statute requires writing or unless parties have expressly agreed otherwise. However, even with a NOM clause, conduct such as part-performance, acquiescence, or verbal agreement followed by reliance may override the clause. This flexibility recognizes the realities of commercial dealings, especially in sectors like infrastructure, technology services, or supply chain arrangements where frequent changes in scope and timelines occur.
Common Law Jurisprudence on NOM Clauses
In Rock Advertising Ltd v. MWB Business Exchange Centres Ltd [2018] UKSC 24, the UK Supreme Court upheld the strict enforceability of a NOM clause, ruling that oral variations were not effective where a NOM clause prohibited them. This formalistic approach protects contractual certainty. However, the minority opinion, and subsequent commentary, questioned whether strict enforcement aligns with commercial practicality.
By contrast, in Charles Lim Teng Siang v. Hong Choon Hau [2021] SGCA 43, the Singapore Court of Appeal recognized the role of conduct and mutual intent in waiving NOM clauses. The Court held that parties could modify a contract orally even where a NOM clause existed, if their conduct demonstrated consensus ad idem.
Exceptions to Enforceability: Waiver, Estoppel, and Conduct
Courts across jurisdictions acknowledge several exceptions to the rigid enforcement of NOM clauses. The most recognized include:
- Waiver – where a party voluntarily foregoes its right to enforce a NOM clause.
- Estoppel – where a party induces reliance on an oral change and later seeks to deny it.
- Subsequent Conduct – where both parties act in a manner inconsistent with the original contract.
- Executed Oral Agreements – where the oral variation has been performed by both sides.
Practical Considerations and Best Practices
In drafting or negotiating contracts, clarity around modification procedures is essential. Parties should not only include NOM clauses but also state whether waiver of the clause itself must be in writing. From a dispute resolution perspective, lawyers must closely examine communications, meeting minutes, payment records, or conduct that may establish mutual understanding despite a written clause.
Given that Indian courts are pragmatic and influenced by common law logic, they tend to balance textual interpretation with equitable principles — such as good faith, implied agreement, and business efficacy. As a result, in high-stakes commercial matters, reliance solely on a NOM clause without examining overall intent and conduct may prove insufficient.
Conclusion
While No Oral Modification clauses serve to protect the integrity of written contracts, their enforceability is not absolute. Indian jurisprudence and persuasive international precedents suggest that parties can, through words or conduct, override or waive such clauses, particularly where mutual intention is evident and reliance has occurred. For both commercial practitioners and dispute resolution professionals, it is essential to evaluate the entire factual matrix — not just the written clause — before asserting or defending against a claim of contractual modification.
To explore related topics including drafting enforceable contracts, the role of estoppel in commercial law, or interpreting modern commercial agreements, visit: https://rdlawchambers.com/research-articles/
Author: Ms. Riju Lodha
Guided by: Advocate Ravish D. Bhatt, Managing Partner, R & D Law Chambers LLP
Email – info@rdlawchambers.com
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