Contracts are legally binding agreements between two or more parties that outline their obligations and rights. However, circumstances can change, and the terms of the contract may need to be adjusted. This is where variations in contracts come into play. A variation modifies the original contract to better suit new circumstances while keeping the agreement valid.
In this article, we’ll explore how contracts can be varied, what to watch out for, and why it’s essential to do it correctly. Our contract lawyer services ensure your interests are protected.
What Does It Mean to Vary a Contract?
To vary a contract means to change its terms in some way. These changes could include:
Adjusting deadlines or payment schedules.
Adding or removing responsibilities.
Revising details that were unclear in the originally agreed document.
For example, two companies might agree to extend the delivery date in a commercial contract due to supply chain issues. Variations ensure contracts remain practical and fair over time.
How Can a Contract Be Varied?
There are several ways contracts can be varied. The method often depends on the type of contract and whether it includes variation clauses. Common methods include:
1. Written Variation
The safest and most common way to vary a contract is through a written agreement. Many contracts state that they can only be varied in writing, ensuring there’s clear documentation of the changes.
2. Verbal Variation
In some cases, parties may verbally agree to vary the contract. While this can be quicker, it’s risky because it’s harder to prove in case of a dispute. Verbal variations might work for informal agreements, but for complex contracts, it’s better to create a written record.
3. Implied Variation
Sometimes, the actions of the parties show that the contract has been varied. For example, if both parties start following new payment terms without objection, this could imply an agreed variation. However, implied variations can lead to misunderstandings if the terms are unclear.
Why Might Parties Vary a Contract?
Contracts are varied for many reasons, often to reflect changes in circumstances or priorities. Here are a few examples:
Adjusting Deadlines: Delays in projects may require changes to delivery dates.
Revising Payment Terms: Rising costs or financial challenges may lead to renegotiation of fees or payment schedules.
Changing Scope of Work: A client might request additional services that weren’t part of the original agreement.
Variations help ensure that agreements remain relevant and workable even when situations evolve.
Steps to Vary a Contract
When the parties having agreed to vary a contract, it’s important to follow these steps to ensure the variation is valid:
1. Review the Original Contract
The first step is to check the original contract for any variation clauses. Some existing contracts explicitly state that they can only be varied in writing or with both parties' consent. Ignoring these clauses could render the variation unenforceable.
2. Document the Agreed Variation
Put the changes in writing, even if the contract doesn’t require it. A written variation agreement ensures there’s a clear record of what was modified and when.
3. Be Specific About the Changes
The variation agreement should detail exactly what’s changing, such as new deadlines, payment amounts, or responsibilities. Avoid vague language to reduce the risk of disputes later.
4. Get Signatures
Both parties should sign the variation document to confirm their consent. This makes it clear that the variation reflects what was mutually agreed.
Key Considerations for Valid Variations
1. Mutual Agreement
Variations must involve both parties agreeing to the changes. One party cannot unilaterally impose a variation without the other's consent. This ensures fairness and prevents disputes.
2. Follow Legal Requirements
Some contracts, such as employment agreements or real estate transactions, may have legal rules about how they can be varied. Always ensure compliance with the law when making changes.
3. Preserve the Original Agreement
The variation should build upon the original agreement rather than replace it entirely. For example, if only the payment terms are being adjusted, the rest of the contract remains in force.
Risks of Improper Variations
Failing to properly vary a contract can lead to serious problems:
Disputes Over Changes: If there’s no written record of the variation, it may be hard to prove what was agreed.
Unenforceable Variations: Changes that violate the original contract’s variation clauses may be invalid.
Confusion: Without clear documentation, parties might have different interpretations of the new terms.
To avoid these risks, always ensure variations are clear, mutually agreed, and properly documented.
Example: How Variations Work in Practice
Here’s a practical example of how a contract might be varied:
Scenario: A company hires a contractor to complete a building project by December 31. Due to bad weather, the project falls behind schedule.
Variation: The parties agree to extend the deadline to January 31 and document the change in a written variation agreement. Both parties sign the document to confirm their consent.
Outcome: The variation ensures the contract remains valid while adapting to the new timeline.
When Can a Contract Not Be Varied?
There are situations where variations are not possible or allowed:
No Variation Clauses: Some contracts include strict terms that limit how they can be changed, such as requiring all variations to be in writing.
Unilateral Changes: One party cannot force changes without the other’s consent.
Illegal Terms: Variations involving unlawful activities or breaching regulations are invalid.
Variations allow parties to adapt contracts to new circumstances while maintaining their validity. Whether you’re adjusting timelines, revising payment terms, or clarifying responsibilities, it’s essential to ensure the changes are mutually agreed, documented, and compliant with the original agreement. By following best practices, parties can avoid disputes and ensure their contracts remain effective and enforceable.
When in doubt, always seek professional advice to ensure your contract variation is handled properly.
If you need help managing contract variations, contact Canko Law Firm today. We’ll make sure your contracts are clear, enforceable, and work in your best interests.
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