The Enforceability of a No-Oral-Modification Clause

Introduction: the paper examines the enforceability and effectiveness of a no-oral modification clause (NOM clause). Such a clause, which is a standard boilerplate provision in many contracts, requires that all modifications and additions to the contract be made in writing and signed by the parties. The NOM clause is intended to provide certainty to the relationship between the parties and prevent problems related to possible abuse, as well as difficulties in proving oral agreements. The relevance is due to the logical task that arises when this provision is violated, when the parties verbally reach an agreement on the modification and begin to implement it. The purpose of the study is to determine the legal consequences of an informal modification to a contract containing a NOM clause. The research is based on a comparative legal analysis of the legal norms, doctrinal positions and judicial practice of individual countries, including Russia. Results: the legal effectiveness of the NOM clause is subject to debate, as it creates a tension between the parties’ freedom to bind themselves by obligations and their freedom to alter contractual relations. There are various approaches to solving this problem. Thus, one approach affirms the freedom to override the clause: the parties are free to do so, because an oral modification of the contract constitutes a waiver of the NOM term, thereby giving precedence to the new agreement. Another approach is to give precedence to the NOM term: the clause binds the parties, and ignoring it is an unacceptable disregard for the freedom of contract. Therefore, any agreements reached in violation of the form have no legal effect. International instruments such as the Vienna Convention on Contracts for the International Sale of Goods (CIGS) recognize the validity of the NOM clause, but introduce a good faith safeguard: a party may be precluded from invoking the clause to the extent that the other party has relied on the party’s conduct. In Russian practice, courts, as a rule, require the evidence of a written agreement, and modifying a contract by specific actions in the presence of the nom clause is often considered impossible. The mandatory restrictions apply to state and municipal contracts: the actual performance of additional work does not require payment in the absence of a written agreement. Conclusions: the nom clause is a significant instrument of contract law that allows parties to limit their future freedom in favor of predictability. The problem of informal modification remains a paradox: the freedom of contract extends to the right to voluntarily restrict this freedom. Legislation and law enforcement practice provide flexible approaches, requiring an assessment of the fairness of upholding or overriding the clause in each specific case.