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A contract in writing which contains a clause requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated. However, a party may be precluded by its conduct from asserting such a clause to the extent that the other party has acted in reliance on that conduct.
Parties concluding a written contract may wish to ensure that any modification or termination by agreement will also be in writing and to this end include a special clause in the contract. This article states that as a rule such a clause renders any oral modification or termination ineffective, thus rejecting the idea that such oral modification or termination of the contract may be seen as an implied abrogation of the written modification clause. The article however provides for an exception to the general rule by specifying that a party may be precluded by its conduct from invoking the written modification clause to the extent that the other party has acted in reliance on that conduct.
A, a contractor, contracts with B, a school board, for the construction of a new school building. The contract provides that the second floor of the building is to have sufficient bearing capacity to support the school library. Notwithstanding a written modification clause in the same contract, the parties orally agree that the second floor of the building should be of non-bearing construction. A completes construction according to the modification, and B, who has observed the progress of the construction without making any objections, only at this point objects to how the second floor has been constructed. A court may decide that B is not entitled to invoke the written modification clause as A reasonably relied on the oral modification, and is therefore not liable for non-performance.
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