Contracting parties generally and consistently rely on “no oral modification” (NOM) clauses to preclude counterparties from unilaterally altering contract terms and to protect against uncertain results. NOMs not only provide assurance, but they also provide a formal, predictable process on which contracting parties can rely to properly and predictably modify the contract.
The proliferation of emails, text messages, and other instant-messaging applications has created opportunities for parties to claim contract modifications in situations where, historically, such arguments would have been summarily precluded, significantly delaying litigation, precluding summary judgment, and causing increased legal fees to address and perhaps challenge the purported modification. Accordingly, while the availability of digital, instantaneous communication is designed to streamline discussions, these informal negotiations have blurred the lines and infused unpredictability into contract enforcement.
This article discusses general contract modification laws, highlighting how courts applying these laws have grappled with electronic communications by comparing New York and Delaware decisions and, finally, lists practical suggestions practitioners can employ to help guard against unintended contract modification through an electronic communication.