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Commercial Landlord Caught by Oral Variation to Written Contract

Written contracts can be varied orally post signature unless they specifically state to the contrary. In one case which illustrated the point, a property landlord was found by the Court of Appeal to have wrongfully excluded a tenant who was in rent arrears, having earlier orally agreed to stay its hand.

The tenant, who was about £12,000 in arrears of licence fees and other charges, was locked out of its serviced offices by the landlord. The latter’s claim to payment of the arrears was upheld by a judge and the tenant’s counterclaim that it had been entitled to remain in occupation of the premises was rejected.

In upholding the tenant’s challenge to that decision, however, the Court found that an oral agreement – by which the landlord accepted that payment of the arrears could be rescheduled and that the tenant could remain in occupation in the interim – was binding on both parties.

The tenant successfully argued that there was nothing in the licence agreement which precluded its oral variation at a later date. Its agreement to pay £3,500 of the debt straight away, and to make arrangements for payment of the arrears in full over time, was sufficient consideration to make the oral variation enforceable.