“Non-variation” clauses that can be varied

Source: Paul Jacobson

The non-variation clauses that are found in so many contracts can have loopholes that render them useless. The end result is that your contracts can be amended informally with terrible consequences.

Anyone who is familiar with a commercial agreement has seen a “non-variation” clause.  It usually looks something like this:

No addition to, variation, or agreed cancellation of this agreement or any of the annexures hereto shall be of any force or effect unless in writing and signed by or on behalf of the parties.

This clause is often accompanied by clauses that exclude any terms other than those contained in the agreement itself, among others.  Another name for this clause is a “Shifren clause”, named after the case of S A Sentrale Ko-op Graanmpy Bpk v Shifren decided by the then Appellate Division (now called the Supreme Court of Appeal) where the Court held that such a clause does, indeed, protect the agreement from amendment where that amendment is not permitted by the clause.

What many people don’t realise is that although such a clause protects the agreement from casual amendments, the clause itself must also be protected to prevent an indirect amendment of the agreement.  Achieving this additional measure of protection is very simple; simply amend your “non-variation clause” by including the clause itself in the scope of protection afforded by the clause to the rest of the agreement. The following is suggested:

No addition to, variation, or agreed cancellation of this agreement, this clause or any of the annexures hereto shall be of any force or effect unless in writing and signed by or on behalf of the parties.

If your clause does not protect itself, it is possible for the agreement to be amended in a manner not permitted by the clause.  This would occur through an amendment of the “non-variation” clause and, in turn, an amendment of the rest of the agreement.  One of the leading authorities on the law of contract, Professor R H Christie, wrote in his book The Law of Contract in South Africa (4th edition), at page 520, that a “non-variation clause that does not entrench itself against variation may itself be cancelled or varied by express agreement, and this agreement may be informal“.

The bottom line: check your contracts and make sure you are not open to what could become a very surprising and potentially devastating attack.