A business contract may fail over time to keep up with business changes. The circumstances underlying a contract or the circumstances of the parties themselves may change. If you become involved in any dispute over a business contract, consult a Toronto business lawyer at once.
A contract is a legally binding agreement. What makes contracts important – and why business requires them – is that they are binding, and they are enforceable by the courts. If one side fails to satisfy its contractual responsibilities, the other side may bring legal action against that party.
When you are involved in a contract dispute, you may find that a contract does not say what you thought it said or that it may not reflect how the agreement is actually being carried out. How can a contract be varied? What legal steps must the parties take to make a contract variation valid?
If you will keep reading this brief discussion of how to vary a business contract in Ontario, you will find the answers to these questions, and you will also learn about the sound advice and legal services that business owners may need a Toronto contract lawyer to provide.
What Constitutes the Variation of a Contract?
A business relationship between two parties evolves over years and sometimes decades, so at times it may be necessary to make variations to business contracts that are already in place.
In most cases, both parties should agree in writing to a contract variation before any changes go into effect. Either party to a business contract may propose a variation to the contract for reasons that include but are not limited to:
- changes in the charges, rates, or fees involved
- changes in the resources needed to fulfill the contract
- changes in the services or goods involved
- extensions of deadlines
- an explanation of a matter inadequately dealt with by the contract’s original text
In What Ways May Contracts Be Varied?
A business contract may be varied in the following ways:
- In writing: Putting a contract variation in writing is the most common and effective way to vary a business contract. In fact, a contract may include a “no oral modification” clause that requires any variation to be put in writing and to be agreed to by both parties.
- Verbal agreement: Contracts may be established and varied by the verbal agreement of both parties. Enforcing such a contract may be difficult if there’s no proof of what was agreed to. However, recordings and witnesses can provide evidence if a dispute emerges.
- Unilateral variation: Most contracts may not be varied unilaterally without the prior agreement of both parties to allow unilateral variations. A typical agreement to allow unilateral variations allows only specific, minor, and limited unilateral variations.
- Implied variation through conduct: If there are one or more specific deadlines in a business contract and if those deadlines are not met, an implied variation may be allowed for a reasonable extension of the deadline or deadlines.
What Makes a Contract Variation Valid?
There are usually four conditions or elements that make a variation to a business contract valid:
- The parties are in mutual agreement regarding the modification to the contract. In some cases the contract may give one party the sole right to make limited changes, but mutual consent is usually necessary.
- The parties intend the variation to be permanent. Without such an intention, the variation is only a temporary concession or allowance and not a permanent change to the contract.
- The requirements for varying a contract may be spelled out by law or in the original contract, and both parties must comply with any such requirements.
- An agreement to a contract variation requires a consideration. In other words, one party must provide something to the other in exchange for the variation.
What if a Contract Includes a “No Oral Modification” Clause?
Putting a contract variation in writing may be required by the contract itself, and putting a variation in writing may be the only way to enforce the variation if a dispute arises.
A “no oral modification” clause not only allows for variations but also provides each party with a documented record of their agreement and the way that the agreement changes over time.
By how much may a contract vary before it is no longer the same contract? This is an important question if a dispute emerges, because if the variation makes an essential change to the original contract, a court may decide that it’s a new contract and that the original document is rescinded.
What’s the Most Effective Way to Avoid Business-Related Legal Problems?
The most effective way to avoid most of the legal difficulties that a business may face is to put all of your business agreements in writing and to have those agreements reviewed by a Toronto business lawyer prior to signing them.
Working with an experienced business lawyer is the best way to avoid contract disputes, and it’s the best way to handle the contract disputes that cannot be avoided. A Toronto contract lawyer can help you prepare, understand, negotiate, and enforce your business contracts.
A business lawyer will guide you throughout the legal process if you’re sued over a contract or if you have to file a lawsuit in order to have a contract enforced. Your lawyer will ensure that your contracts advance your best long-term interests and that you have the legal protections you need.
What Else Will a Business Lawyer Do on Your Behalf?
An Ontario contract lawyer will ensure that your contracts – and all of the other aspects of your business – are in full compliance with the law, and your lawyer will also help you prevent minor disagreements and disputes from becoming costly and damaging legal battles.
Small and mid-sized businesses in particular face a variety of complicated legal challenges almost daily, so business owners need to work with a lawyer who offers genuine value and superlative client service.
If you are located in or near the Toronto area, the right Ontario business lawyer will bring any contract dispute that involves you to its best possible resolution while protecting your legal rights at every stage of the process.
Don’t wait for a legal problem to happen. Contact a business lawyer now to help you review your current contracts and to help you put solutions in place before legal problems arise.