Understanding No Oral Modification Clauses

Contract disputes most often arise when one or both parties believe that the other has committed a breach of contract. While a breach of contract dispute may seem like a simple matter, most breach of contract suits require much more legal scrutiny than a line-by-line examination of the contract’s provisions. The ‘no oral modification’ clause is a key example of the legal complexities involved in a breach of contract case.

In Evatt v. Campbell (1959), J. F. Evatt and K. H. Campbell terminated their written business partnership through an oral agreement and instead established a salary agreement provided that Evatt fulfill his services as a bookkeeper, salesman, office manager and rent collector. After Evatt had fulfilled his terms of the agreement, Campbell payed Evatt a sum of $700, the amount Evatt would have ordinarily received per the terms of the business agreement, instead of the the sum of $3,600 as promised in the salary agreement.

Campbell argued that the business partnership was not in fact terminated, because it contained a ‘no oral modification’ clause. This ‘no oral modification’ clause suggested that the partnership contract could only be amended or terminated through writing, which would then make the salary agreement invalid. The South Carolina Supreme Court instead found that the salary agreement was valid since both Evatt and Campbell verbally agreed upon the terms. The state Supreme Court furthered that even a written contract with a ‘no oral modification’ clause could be amended or removed through a superseding oral agreement.

The legal significance of this case is that a ‘no oral modification’ clause bares no legal utility or enforcement powers, since the clause itself is subject to oral modification.  Another important implication from Evatt v. Campbell is that a total reliance on the written terms of a contract would be misguided. In some ways, the mechanics of a contract– such as the allowance of oral amendments– carry more legal authority than the written provisions alone.

We recognize that oral modification laws can sometimes be confusing. The ‘no oral modification’ clause should be a reminder that a strictly literal interpretation of a contract will often be insufficient.  Our Charleston breach of contract attorneys make it our mission to inform clients of the many legal intricacies that affect their case.

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