When is a Non-Modifiable Contract --- Modifiable?
ADP supplied equipment and software to a client under a contract which was to last seven (7) years. The written agreement specified that it could not be modified “Except by a writing signed by both parties”. When the customer sought to terminate the contract and walk away from it early, ADP filed a lawsuit to collect for the full seven (7) years of the contract. The customer replied that ADP had orally agreed to modify the terms and shorten the length of the contract.
The agreement language clearly barred any modification of its terms that was not in writing. Therefore, the trial judge ruled for ADP. The Superior Court of Pennsylvania reversed. ADP v. Morrow Motors, Inc., 2009 Pa. Super. 52, 969 A 2d 1244 (March 23, 2009). In summary, the Superior Court ruled that even though an agreement says that it cannot be modified except in writing, that does not mean what it says. The contract still can be modified orally. The only difference is that, “An oral modification of a written contract must be proved by clear, precise, and convincing evidence.” Moreover, the Court pointed out that the same law applied in New Jersey. The client will have the opportunity to prove in court that ADP did orally agree to modify their contract --- despite the clear contract language barring an oral agreement.
How can this be explained? Perhaps, the lesson to be learned may be simply that courts do not like to allow parties to mislead each other in their relationships. Even where it appears that the clear language is on your side, you often need some element of fairness to support your position as well.
