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Importance of MWB v. Rock [2018] UKSC 24 in Contract Law

This article discusses the significance of the MWB v. Rock case in contract law, focusing on the requirement of written variations in contracts, the authority of agents, and the validity of entire agreement clauses. The article provides insights from Lord Sumption's judgment and analyzes international and Australian legal perspectives.

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Importance of MWB v. Rock [2018] UKSC 24 in Contract Law

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  1. “ Why is Rock v MWB [2018] UKSC 24 at [1] and [14] per Lord Sumption important?” Michael Trim Wednesday 7 August 2019

  2. So why is MWB important? (1) • MWB operated serviced offices. • Rock Advertising took out a licence for 12 months. • After about 6 months Rock was about 4 months in arrears.

  3. So why is MWB important? (2) • Allegation that variation agreed on the phone. • That was disputed. The “boss” of the person who agreed it rejected what was discussed by phone. • MWB locked Rock out and sued for arrears. • Rock claimed it could not because the contract had been varied by the discussion.

  4. So why is MWB important? (3) • At first instance, Judge Moloney QC found that there had been an oral agreement to vary and that the agent on the phone had ostensible authority to make it. • But – it was found to be ineffective because it was not in writing, as was required by clause 7.6 of the contract.

  5. So why is MWB important? (4) • Clause 7.6 provided that: “This License sets out all of the terms as agreed between MWB and Licensee. No other representations or terms shall apply or form part of this Licence. All variations to this Licence must be agreed, set out in writing and signed on behalf of both parties before they take effect”

  6. So why is MWB important? (5) • The Court of Appeal overturned the decision and stated that the oral agreement amounted to an agreement to dispense with clause 7.6. • The Court of Appeal found that MWB were therefore bound by the variation and could not claim the arrears at the time.

  7. So why is MWB important? (6) • The Supreme Court allowed the appeal and restored the original decision. • Lord Sumption, with whom Lady Hale, Lord Wilson and Lord Lloyd-Jones agreed, stated: “In my opinion the law should and does give effect to a contractual provision requiring specified formalities to be observed for a variation”

  8. So why is MWB important? (7) • The decision analyses the previous Australian authorities and other international decisions. • It also analyses the previous English position, which was said to have been equivocal. • Paragraph 12 contains a powerful analysis of why such clauses should be upheld.

  9. So why is MWB important? (8) • Paragraph 13 contains a strong rejection of the reasons to the contrary. • Paragraph 14 makes it plain the reasoning ought apply equally to entire agreement clauses that regulate pre-contractual representations.

  10. So why is MWB important? (9) • Relax – I am nearly finished (last slide!). • How does this sit with Australian law? • What effect is it likely to have? • Submit that renewed support for such clauses is likely and consideration of the issue at the highest level seems warranted given the conflicting positions.

  11. Michael Trim T +61 7 3008 3920 EMICHAEL.TRIM@QLDBAR.ASN.AU

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