Variation

by Practical Law Commercial

This standard clause provides long and short form versions of a variation clause for a commercial agreement. Often referred to as an amendments clause or a no oral modification (NOM) clause, a variation clause sets out a prescribed procedure for the parties to follow when amending their agreement. The primary purpose of this clause is to prevent informal or inadvertent variations made verbally or by conduct or other undocumented means, thereby avoiding potential disputes over whether a change was intended and its exact terms. This resource discusses the legal effectiveness of such provisions and outlines the practical benefits, such as preventing attempts, whether deliberate or inadvertent, to undermine written agreements by informal means and helping corporations to police internal rules on who has authority to agree to contract variations. The guidance explores the differences between the long and short form options and key drafting considerations.