This contract tip is about no oral amendment provisions.
These provisions say that the parties may only amend the agreement in writing. We include the no oral amendment provision for a few reasons. One is to prevent unintended contract changes. Another is the statute of frauds, which requires some contracts and amendments to be in writing.
There are different approaches to drafting these. One common way is to say just that amendments must be in writing. I'm not a big fan of this style. Isn’t every email back and forth “a writing” by the parties? Do you really mean that every email can serve as an amendment? This approach also establishes a vague standard for the judge and arbitrator to apply. Consider whether the parties are better off leaving the issue to the applicable law than adding a vague standard to the mix.
Another approach replaces “writing by the Parties” with “a writing signed by their authorized representatives.” I like this wording a bit better, but not by much. Signing an email with your name could satisfy this requirement under some electronic signature laws.
My preferred approach is to include “that identifies itself as an amendment of the Agreement.” This approach offers a more objective bright-line test of what writings may serve as amendments.
There are two other things I want to point out.
First, while U.S. courts generally enforce these provisions, not all do. The law in some states leaves open for the court to rule that the parties later waived this provision through their course of conduct.
Second, I don’t spend much time on this provision in my commercial contracts.
In most cases, I cannot predict with any certainty what wording will help my client in a dispute. If I negotiate a very exacting and limited wording, my client may be in a situation wanting to argue for a looser and more flexible approach. And vice versa.
My approach is to focus my edits and negotiation on provisions that offer my client more certainty of either creating an advantage or mitigating a known risk.
What’s your approach to these provisions?
