You’re a smart businessperson. You’ve hired an estate lawyer to draft a great contract to protect your interests. You make sure that each and every customer, client, employee or independent contractor signs that agreement. So you’re protected, right? Maybe.
A recent ruling in the case of Miller UK Ltd. V. Caterpillar Inc., in the Northern District of Illinois found that a contract can be modified orally, even after it is signed, and even if it has a “no oral modifications” clause. The court stated, “Illinois law allows the terms of a written contract to be modified by a subsequent oral agreement notwithstanding contractual language to the contrary.”
Now, this doesn’t mean that your contract is worthless. However, each person in your company dealing with parties to a contract must be sure that their actions and words are consistent with the terms of that contract.
Also be wary of any emails, texts and phone calls. Your conversations may also be considered a modification of your written contract. For best practices, when you are discussing additional terms, sales, or any other matter with another party, be sure to state in writing the terms of that discussion. If you’re discussing additional services, be sure to state that this quote is not enforceable unless both parties agree in writing by signing a written Statement of Work. Send an email before a conversation or negotiation with the other party stating that you will not be held to anything you discuss until it is agreed to in writing.
I understand that this can will add even more work to your to do list, but a simple email may be the evidence you need to prove that conversation was not a modification to a written agreement already in place.