• Internal Code :
  • Subject Code : LAWS622
  • University : Auckland University of Technology
  • Subject Name : Contract Law

Case Study: Rock Advertising v MWB Business Exchange Centres Ltd

Table of Contents

Introduction

1. Practical reasons for including NOM

2. Effect of NOM clause on the overriding intention of parties

3. Inconsistency of NOM clause to ‘party autonomy’ 

4. Entire agreement clause

5. Coping of NOM clause inconsistency by common laws 

6. Doctrines of estoppels 

7. Lord Briggs’ judgment

8. Subject to contract

Conclusion

Bibliography

Introduction

No Oral Modification (NOM) clause is thriving in the judgement of the Supreme Court in Auckland. The study will be dealing with several questions regarding the NOM clause related to business.

1. Practical reasons for including NOM

NOM mainly implies that a contract is not liable to get amended after the sign of both the parties involved with it1. However, the reasons for implementing NOM in a contract involves

  • Prevention of the attempts of undermining the written agreements

  • Avoiding disputes

  • Easy application of the internal policies and procedures for contract variations.

2. Effect of NOM clause on the overriding purpose of parties

As per the judgement of the Supreme Court, Lord Sumption pointed out that it is not legally viable to give the required effect of a contractual provision in terms of specific formalities for variations. This approach as per the judgement seems to be overriding the purpose of the parties in a contract with respect to NOM clause.

3. Inconsistency of NOM clause to ‘party autonomy’

Court of Appeal by indicating the above-mentioned term mentioned that both the parties after signing the contract will not be having any self-governance in the contract. The parties will also not be effective in implementing necessary terms within the contract when required. It prevents the full authority of the parties on the contract.

4. Entire agreement clause

The entire clause of the agreement reveals the whole contractual agreement between both the parties. It also prevents the parties from relying on a preceding agreement along with discussions or negotiations. However, parties involved in the commercial contract find this contractual agreement to be helpful as it helps the parties to have a full view of the future agreement. Besides, as this agreement involves no further changes, therefore, parties can rely on the contract and can proceed accordingly.

In the current case of Rock Advertising v MWB Business Exchange Centres Ltd [2018] UKSC 24, it can be noticed that the court has pointed several questions regarding the violation of NO MN agreement2. However, the court’s decision of holding the full agreement contract provides support to the NOM clause within the contractual agreement. It is because of both the aspects relaters with the fact that any decisions after the formal signature of both the parties are found to be irrelevant.

5. Coping of NOM clause inconsistency by common laws

In the case of Rock Advertising v MWB Business Exchange Centres Ltd [2018] UKSC 24, it can be observed that the Supreme Court denied the contractual oral agreement amidst both the parties as it violated the rules of the NOM clause3. However, as per the view of plurality, it can be inferred that common law is capable of coping with the abstract inconsistency reflected in the NOM clause. It is because common law does not impose on the necessity of any types of the form along with the preparation of the contract. It provides the party with the free will agreeing on informally to dispense within a contract. It is also effective in coping with the formalities within a project. Hence, it provides the common people with the view that the common law can manage the NOM clause inconsistency.

6. Doctrines of estoppels

It can be reviewed that in the case of Rock Advertising v MWB Business Exchange Centres Ltd [2018] UKSC 24, Supreme Court recognised the estoppels as "safeguard against injustice" indicating that the contract is not liable to be varied by an agreement made orally. However, the party still remains in the position to introduce necessary arguments. Besides, certain limitations on the doctrine of estoppels were also introduced by Lord Sumption. These limitations are likely to destroy the whole certainty advantages within a contract that made the stipulation of parties. Therefore, with the help of the principles of the doctrine of estoppels, the parties will be gaining the desired benefits within the contract. In addition to this, the principles can also be effective in mitigating the inconsistencies introduced by the NOM clause. The case, Energy Venture Partners Ltd v Malabu Oil & Gas Ltd, the judges came to the same conclusion4. Therefore, both the parties can be liable for equal benefits further mitigating the aspects of injustice within it.

7. Lord Briggs’ judgment

A. Lord Briggs’ in terms of NOM clause expressed that the clause is likely to bind the several parties within a contract. In addition to this, the parties as per this contract are likely to express the views regarding the project openly. He also pointed out that the parties are likely to enforce an act properly with the help of this contract. This observation of Lord Briggs’s seems to differ from the other population along with the decisions of Lord Sumption.

B. Having a difference in reasoning, Lord Briggs’ seems to be coming to the similar findings as Lord Sumption and other population. It is because Lord Briggs’ settled that the NOM clause is likely to bind the contractual parties that are effective for executing a contract safely and soundly5. In addition to this, this contractual term is also to mitigate the conflict likely to arise within the parties. Hence, analysing all the aspects Lord Briggs seems to be coming to the same conclusion as other and perceiving NOM clause to be useful.

8. Subject to contract

Rules of contract formation involve the elements of consideration, intentions, and legal relations along with content, offer and acceptance. However, subject to contract in terms of contractual rules implies no legal authorisation of the legal policies in the formation of a contract6. However, in terms of negotiation, the subject of the contract is being used. It helps in proper negotiation along with the proper maintenance of the legal terms within the contract. Therefore, this approach is used by Lord Briggs in analysing the importance of legal proceedings in the formation of the contract along with the aspects of negotiation to prevent conflicts.

Conclusion

Overall, the study infers that the NOM clause can be beneficial for parties involved in the contract, though; it is also likely to create certain complications within the contracts. However, both the judge’s Lord Briggs’s and Lord Sumption seem to be agreeing to aspects of the NOM clause.

Bibliography

Cases

Energy Venture Partners Ltd v Malabu Oil & Gas Ltd

Rock Advertising v MWB Business Exchange Centres Ltd [2018] UKSC 24

Journals

Roberts, Marcus. "No Oral Modification clauses: a New Zealand perspective” (2019) ALAA 223 at 224.

Ashton, Jeanette, and Juliet Turner. "Between Rock and a hard place? No consideration from the Supreme Court in Rock Advertising Ltd. v MWB Business Exchange Centres Ltd.[2018] UKSC 24." 29.10 (2018) ICCLR 593-607 at 594.

Tattersall, Luke. "No Oral Modification Clauses: Contractual Freedom under English and New York Law." (2019) JICL 117 at 118.

Pasas, George. "No Oral Modification Clauses: An Australian Response to MWB Business Exchange Centres v. Rock Advertising [2018] 2 WLR 1603." 45 (2019) UWALR 141 at 142.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Contract Law Assignment Help

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