Rock Solid? The Legal Effect of No Oral Modification Clauses in New Zealand in light of Rock Advertising Ltd v MWB Business Exchange Centres Ltd

Abstract

No oral modification (NOM) clauses are a “near ubiquitous” part of many commercial contracts. These clauses purportedly prevent the parties from varying their contract unless they comply with self-imposed formality requirements – usually that any variation must be in writing and signed. This paper analyses the legal effect of NOM clauses, in light of the United Kingdom Supreme Court’s decision in Rock Advertising Ltd v MWB Business Centres Exchange Ltd. It argues that New Zealand should not follow the decision, primarily in order to uphold contract law’s central consideration of party autonomy. While parties may enter agreements that temporarily restrict the freedoms that they respectively have, their shared contractual freedom to alter those agreements using a method recognised by the general law is inalienable. The NOM clause cannot override the later contractual bargain. Subsidiary issues related to the practical consequences of the different views are also analysed.