UK: Court Of Appeal Finds Entire Agreement Clause Did Not Preclude Terms Of Superseded Contract Being Admissible To Explain Meaning Of Unconventional Term

Last Updated: 29 August 2019
Article by Anna Pertoldi, Maura McIntosh and Jan O'Neill
Most Read Contributor in UK, October 2019

The Court of Appeal has held that the parties agreed a binding variation to incorporate additional services (Intermediate Minor Oral Surgery, or IMOS, services) into a standard form contract for the provision of dental services, so that an earlier contract for the provision of the IMOS services was superseded. That meant that the agreement for the IMOS services could not be terminated without fault by the dentists; the ability to terminate on one month’s notice under the IMOS contract no longer applied: NHS Commissioning Board v Vasant and others [2019] EWCA Civ 1245.

The variation was in writing and signed by both parties, as required by a so-called “no oral modification” clause in the standard form contract. Although the variation was in very brief terms, which did not (in themselves) explain the nature of the services to be provided under the varied contract, the court rejected an argument that it failed for uncertainty.

While the terms of the IMOS contract could not be said to be incorporated into the standard form contract, as they were not expressly incorporated by reference and the standard form contract contained an entire agreement clause, they were admissible as extrinsic evidence for the purpose of explaining the meaning of the relevant expression in the standard form contract.

The decision shows that, even where an earlier contract is superseded and no longer applies, it may be admissible to explain the meaning of an unconventional, or technical, expression in the subsequent agreement. The obvious message for those drafting contracts, however, is that it will almost certainly be preferable to ensure that the meaning of all terms is clear on the face of a contract rather than having to look to extrinsic evidence for that purpose.

Background

The defendants were dentists who provided general dental services to the claimant (the NHS, as successor to Croydon Primary Care Trust) under a General Dental Services Contract (the “GDS contract”) entered into in 2006. This was a lengthy standard form contract which specified the mandatory services each dentist had to provide. Part 10 of the contract, headed “Further Services”, contained a number of clauses which merely stated “Reserved” to indicate that those clauses had no application to the contract.

The GDS contract contained a “written variation” clause, stating that no amendment or variation would have effect unless it was in writing and signed by both parties, as well as an “entire agreement” clause, stating that subject to any such variations the GDS contract constituted the entire agreement between the parties with respect to its subject matter.

In 2007 the parties entered into a 12 month contract for the provision of Intermediate Minor Oral Surgery services under a pilot scheme (the “IMOS contract”). The IMOS contract provided for termination on one month’s notice. The 12 month term expired in November 2008 but the judge held that it continued by conduct.

In April 2009, Mr Butcher of Croydon PCT sent an email to the defendants proposing a clause change to the GDS contract so that “all governance arrangements” for the IMOS services would fall under the GDS contract, rather than the re-signing the IMOS contract. The parties then each signed a one-page Contract Variation Agreement Form (a “VAF”) which described a variation to part 10 “Further Services”, stating that clause 168 was changed from “Reserved” to “Providing an Advanced Mandatory Service in the form of an Intermediate Minor Oral Surgery (IMOS) service”.

The defendants continued to provide IMOS services until 2016 when the NHS purported to terminate the arrangement. The question was whether the VAF amounted to a binding variation of the GDS contract so that IMOS services were provided under that contract, in which case it was common ground that the NHS had no right to terminate without default by the dentist. The NHS argued that the VAF was not sufficiently detailed to amount to a binding variation, and therefore failed for uncertainty. Accordingly, the IMOS services continued to be supplied under the IMOS contract, which was terminable on one month’s notice.

The High Court (Murray J) found that the NHS was not entitled to terminate. The NHS appealed.

Decision

The Court of Appeal dismissed the appeal (Longmore, Lewison and Coulson LJJ, with Lewison LJ giving the lead judgment), but their reasons different from those of the judge.

Lewison LJ noted that the judge had found that reference could be made to the IMOS contract in relation to the operation of the IMOS services, but that all other aspects were governed by the GDS contract. He had not, however, explained what he meant by this, eg whether some of the terms of the IMOS contract had been incorporated into the GDS contract (and if so which), or whether those terms were an aid to construction of the GDS contract, or something else.

The judge had reached his decision on three bases, none of which could be supported:

  1. Contemporaneous correspondence: The judge referred in particular to Mr Butcher’s email, but this was contrary to the general principle that contemporaneous correspondence is irrelevant and therefore inadmissible for the purposes of interpreting a written agreement.
  2. Oral evidence: The judge relied on the oral evidence of the contracting parties, but that could amount to no more than the expression of subjective intention, which was again irrelevant and therefore inadmissible in interpreting the contract.
  3. Conduct of the parties: The contract was made entirely in writing, as shown by both the entire agreement clause and the written variation clause. Although subsequent conduct may be relied on to identify the terms of a contract which is wholly or partly oral, it is irrelevant and therefore inadmissible in interpreting a written contract.

Lewison LJ noted that it is now established that the courts will in principle enforce a contractual provision regulating how a contract can be amended (sometimes called a “no oral modification”, or NOM, clause) – see MWB Business Exchange Ltd v Rock Advertising Ltd [2018] UKSC 24 (considered here). These, together with entire agreement clauses, are intended to achieve contractual certainty.

The defendants argued that the variation in this case (the VAF) fell outside the scope of the entire agreement clause, because that clause was stated to be “subject to” any variations made under the written variation clause. Lewison LJ rejected that argument. Once a variation had been made in according with the written variation clause (ie in writing and signed by the parties), it was governed by the entire agreement clause. The contract therefore consisted only of what was contained in the GDS contract and the VAF, and it was not possible to read those words as incorporating by reference some or all of the terms of the IMOS contract.

However, the entire agreement clause did not prevent the use of extrinsic evidence, which is admissible to explain the meaning of an unconventional expression in a contract. That principle is not limited to expert evidence, and is not affected by the presence of an entire agreement clause (see eg Proforce Recruit Ltd v Rugby Group Ltd [2006] EWCA Civ 69).

The critical words in the present case were “an Intermediate Minor Oral Surgery (IMOS) service”. In Lewison LJ’s judgment, it was not possible to give meaning to the phrase as a whole without extrinsic evidence – in particular clause 17 of the IMOS contract which explained what the parties meant by an “IMOS service” by reference to the description in Appendix 1 of that contract and its annexes. That material was admissible “and indeed vital” in order to give meaning to the phrase. It did not add to or alter the terms of the GDS contract as varied by the VAF: it merely explained what the words mean.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Fenwick Elliott LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Fenwick Elliott LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions