MWB Business Exchange Centres Ltd v Rock Advertising Ltd (Rev 1)

A contractual term requiring variations to be written and signed does not, by itself, prevent the parties from later varying the contract orally or by conduct. Party autonomy permits the parties to change the term, subject to public policy and third-party rights.

Where renewed performance of an existing obligation confers an identifiable practical benefit on the other party, beyond merely accommodating a debtor or receiving what is already due, that benefit can constitute good consideration. The rule concerning part-payment of debts remains applicable where no such additional benefit exists. Promissory estoppel is fact-sensitive, and an agreement to accept instalments does not automatically prevent later enforcement of the original rights.

MWB operated managed office premises and Rock occupied them under a written licence. After Rock fell into arrears, its managing director negotiated a revised payment schedule with MWB's credit controller and paid £3,500 under that schedule.

The trial judge found that an oral variation had been agreed and that the credit controller had at least ostensible authority. He nevertheless held that clause 7.6, which required variations to be written and signed, prevented the variation. He also rejected Rock's estoppel case and entered judgment for MWB.

Rock appealed on the effect of clause 7.6 and estoppel. MWB challenged the finding that the revised arrangement was supported by consideration. The central issues were whether the agreement could be varied orally, whether practical benefit supplied consideration, and whether MWB was precluded from enforcing the original agreement.

1. Appeal allowed. Lord Justice Kitchin delivered the leading judgment. Lady Justice Arden agreed and added reasoning on consideration and estoppel. Lord Justice McCombe agreed with the reasons of Kitchin LJ and Arden LJ on the consideration issue.
2. Clause 7.6 did not prevent an oral variation. The principles of party autonomy, the relevant authorities and the policy arguments had been fully considered in Globe Motors [2016] EWCA Civ 396. The court followed World Online Telecom [2002] EWCA Civ 413, preferring its reasoning to United Bank. Parties may agree to vary a contractual term requiring written variations, including by oral agreement or conduct, subject to applicable legal limits.
3. The trial judge was entitled to find that the oral variation had been made and that MWB's representative had authority. Rock's payment and promise to follow the revised schedule gave MWB practical benefits: immediate payment, a better prospect of recovering the arrears and continued occupation of the premises, avoiding a vacant unit. Those benefits went beyond merely receiving payment of an existing debt. Applying Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, they constituted good consideration. Foakes v Beer (1884) 9 App. Cas. 605 and In re Selectmove Ltd [1995] 1 WLR 474 did not prevent that conclusion.
4. The estoppel discussion was unnecessary because the variation was enforceable, but the court considered it on the assumption that it was not. Promissory estoppel depends on the legal relationship, representation, reliance and inequity. Its effect may be suspensive or, in appropriate circumstances, extinguishing. It is not automatically inequitable for a creditor to resume reliance on original rights after agreeing to instalments. Here Rock suffered no relevant detriment, MWB gave clear notice after two days, and Rock could be restored to its former position.
5. Waiver would have added nothing to the promissory estoppel case. Proprietary estoppel was also unavailable: the claim was not proprietary and no detriment had been established. Arden LJ expressed a provisional alternative analysis of the variation as a collateral unilateral contract, but the appeal was allowed on the enforceable-variation analysis.

1. Court of Appeal (Civil Division): allowed Rock's appeal from the order of HHJ Moloney QC.
2. Central London County Court: entered judgment for MWB on its claim for arrears and other charges and dismissed Rock's counterclaim.