Parties often agree amendments to their contracts by email, but do not formally document them, e.g. by way of a signed deed of variation. The Courts are then called on to decide on whether those amendments are effective.
The agreement between Enterprise and C&S included the following clause:
“Any variation of this Agreement shall not be effective unless made in writing and signed by or on behalf of each of the Parties to this Agreement.”
Some time later, Enterprise and C&S agreed by e-mail an increase in C&S’s fees and a minimum two-year term for the agreement. When Enterprise purported to terminate the agreement, the parties took different views on whether the amendment agreed by e-mail was effective.
The Court considered that the parties had effectively varied their agreement by their exchange of e-mails. This is because the variation clause in the agreement did not go as far as to insist on manuscript signatures, paper documents, or that both parties’ signatures must be in the same document.
According to the Court, there is no reason, as a matter of interpretation, why documents in electronic form, in particular an exchange of emails, signed on behalf of both parties should not satisfy the requirements of the clause, provided of course that the other requirements of contract formation and variation such as an intention to be bound are also satisfied.
COMMENT: This decision gives a warning, both for parties negotiating agreements and for parties negotiating amendments to existing agreements. If they want to limit the effect of amendments negotiated by e-mail, careful language is called for when drafting the underlying contracts.
