Ordinarily, contract provisions are what they say they are. The term is the term, a confidentiality clause requires confidentiality, and an assignment clause precludes assignment to another party. The same cannot be said, however, for provisions prohibiting subsequent oral modifications of the original written agreement. This is because Pennsylvania law permits the oral modification of a written contract (other than one for the sale of goods) even when the contract provides that modification may be made only in writing. Somerset Comm. Hosp. v. Allan B. Mitchell & Assocs., Inc., 685 A.2d 141, 146 (Pa. Super. 1996) (citing Universal Builders, Inc. v. Moon Motor Lodge, Inc., 244 A.2 10 (Pa. 1968)). Such modifications can even extend to the sort of “time is of the essence” clauses that are often found in real estate agreements of sale. Accu-Weather, Inc. v. Prospect Commc’ns, Inc., 644 A.2d 1251, 1255 (Pa. Super. 1994).
While Pennsylvania law undoubtedly takes the teeth out of such provisions, that does not mean that the process of proving post hoc contractual adjustments is an easy one. One cannot simply allege the existence of an oral modification and hope to get away with it. Instead, the proponent of the oral modification must (1) prove that the parties’ conduct clearly showed an intent to waive the requirement that the amendments be made in writing, and (2) provide the court with “clear, precise, and convincing evidence” of the subsequent oral modification. This is a difficult evidentiary burden to meet in any case, let alone one involving oral agreement.
Beyond a heightened degree of frustration with the law of contracts, it is my hope that your takeaways from this blog entry are two-fold: (1) a better understanding of contractual provisions prohibiting subsequent oral modifications, and (2) a newfound appreciation for the proverbial paper trail. Whether you are the party attempting to prove or disprove the existence of an oral agreement, life is always easier (and cheaper) if you possess some documentary evidence to support your position. Given the fact that Pennsylvania law does not prohibit the oral modification of written contract, you never know when you might need it.