VARYING CONTRACTS

Extract

MWB Business Exchange Centres Ltd. v Rock Advertising Ltd. [2016] EWCA Civ 553 deals with a number of important issues concerning variation of contracts. Rock occupied as licensee premises managed by MWB. In August 2011, Rock decided to expand its business, and entered into a written agreement with MWB for larger premises for 12 months beginning 1 November 2011. The licence fee was agreed to be £3,500 per month for the first three months, and then £4,433.34 from 1 February 2012. Unfortunately, Rock's business was not as successful as hoped and, by late February 2012, it had incurred arrears of over £12,000. MWB gave notice purporting to terminate the agreement, but the parties then orally agreed to reschedule the licence fee payments due from February to October 2012: Rock would pay less than the originally agreed amount for the first few months, but after that would pay more, with the result that the arrears would be cleared by the end of the year. Pursuant to this agreement, Rock paid £3,500 to MWB, which was the first instalment due in accordance with the revised payment schedule. However, MWB subsequently changed its mind and sued for the arrears. MWB presented two arguments why Rock could not rely upon the oral variation. First, MWB pointed to an anti-oral variation clause in the written contract. Second, MWB relied upon Foakes v Beer (1884) 9 App. Cas. 605 for the proposition that the variation was not supported by consideration. Both arguments failed before a unanimous Court of Appeal (Arden, Kitchin and McCombe L.JJ.).