Varying Contracts – Consideration, Form and Reality
| Published date | 01 November 2022 |
| Author | Pey‐Woan Lee |
| Date | 01 November 2022 |
| DOI | http://doi.org/10.1111/1468-2230.12716 |
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Modern Law Review
DOI:10.1111/1468-2230.12716
Varying Contracts – Consideration, Form and Reality
Pey- Woan Lee ∗
In Ma Hongjin vSCP Holdings Pte Ltd, the Singapore Court of Appeal conrmed that only
contract variations supported by consideration are legally binding, rejecting the suggestion that
the acceptance of practical benets has so diluted the doctrine of consideration as to render
the requirement illusory.Subsequently,in Charles Lim Teng Siang vHong Choon Hau,the Singa-
pore Court of Appeal declined to follow the UK Supreme Court’s reasoning in MWB Business
Exchange Centres Ltd vRock Advertising Ltd, holding (obiter) that no oral modication clauses
do not inevitably invalidate subsequent oral modications. This note evaluates both decisions
and concludes that their combined eect is to endorse a exible framework for contractual
variations in Singapore. The framework builds on the conception of contractual variations as a
complex phenomenon encompassing both one-o exchanges for value and cooperative adjust-
ments to ongoing contracts. Nevertheless, its dominant focus is to promote enterprise through
the enhancement of party autonomy.
INTRODUCTION
Contract modications are traditionally regarded as instances of contract for-
mation but that analytical approach has often been criticised as misconceived.
Critics argue that modications are a legally distinct phenomenon concerned
with the adjustment of ongoing contractual relations rather than the formation
of new ones.As such, modications ought to be upheld sans consideration either
because they are conceptually distinct from exchanges,1or because considera-
tion is not needed in this context as a formality to serve evidential, cautionary
and channelling functions.2Endorsing this line of reasoning, some Common-
wealth courts have held or suggested that contract modications may be en-
forceable even if unsupported by consideration.3English law, on the other hand,
has largely maintained the formal requirement for consideration but incorpo-
rated considerable exibility in the doctrine by expanding, in Williams vRoey
∗Professor of Law, Yong Pung How School of Law, Singapore Management University.
1 Stoljar argues, for example, that modications are not exchanges but concessions, which by their
very nature do not t the benet-detriment structure of consideration: S.J. Stoljar,‘The Modi-
cation of Contracts’ (1957) 35 The Canadian Bar Review 485,486-487.
2 See C.H. Tan, ‘Contract Modications, Consideration and Moral Hazard’ (2005) 17 Singapore
Academy of Law Journal 566 at [21], citing L. Fuller, ‘Consideration and Form’ (1941) Columbia
Law Review 799.
3 See for example Antons Trawling Co Ltd vSmith [2003] 2 NZLR 23 (Antons); NAV Canada
vGreater Frederiction Airport Authority Inc (2008) 290 DLR (4th) 405 (NAV)andRosas vToc a
[2018] BCJ No 938 (Rosas). But these cases did not unambiguously abolish consideration in the
context of modications: see discussion accompanying notes 15-19 below.
© 2021 The Author.The Modern Law Review © 2021 The Modern Law Review Limited. (2022) 85(6) MLR 1534–1549
Pey-Woan Lee
Bros & Nicholls (Contractors) Ltd4(Williams), consideration to include ‘practi-
cal benets’. However,this solution has long been cr iticised as sub-optimal as
Foakes vBeer5(Foakes) continues to obstruct the recognition of practical bene-
ts as sucient consideration for promises to accept part-payments in discharge
of existing debts. In MWB Business Exchange Centres Ltd vRock Advertising Ltd6
(Rock Advertising) the UK Supreme Court side-stepped the tension between
Foakes and Williams but struck down an oral modication for non-compliance
with a no oral modication (NOM) clause. This decision cast the spotlight
on NOM clauses as an alternative tool for invalidating contractual modica-
tions (to mixed reactions from commentators7) but left English law in ‘some
disarray’8as the Foakes/Williams conict remains unresolved.
The Singapore Court of Appeal has recently weighed in on these issues in
two signicant decisions. In Ma Hongjin vSCP Holdings Pte Ltd9(Ma Hongjin),
the court armed the orthodoxy that only contract variations supported by
consideration are legally binding. In so concluding, the court left no room for
doubt that consideration remains a critical qualier for enforceability gener-
ally. The recognition of practical or f actual benets may have a dilutive eect
on the doctrine of consideration but it does not wholly eviscerate the con-
cept. In the subsequent case of Charles Lim Teng Siang vHong Choon Hau10
(Charles Lim) the Singapore Court of Appeal held (obiter) that NOM clauses
do not inevitably invalidate subsequent oral modications though they raise a
rebuttable evidentiary presumption that there is no variation in the absence of
a wr itten agreement. Disagreeing with Rock Advertising, the cour t views this
conclusion as a logical outworking of ‘party autonomy’ so that a binding con-
tract can only constrain the future exercise of the parties’individual liberty but
not their collective liberty to alter their obligations. Both decisions have the
eect of endorsing a exible framework for contractual variations in Singapore.
The framework builds on the conception of contractual variations as a complex
phenomenon encompassing both one-o exchanges for value and cooperative
adjustments to ongoing contracts. Overall, however, its dominant concern is to
promote enterprise by optimising parties’ autonomy in responding to unfore-
seen events.
7 For a sampling of academic commentary, see J. O’Sullivan, ‘Party-agreed Formalities for Con-
tractual Variation – a Rock of Sense in the Supreme Court?’ (2019) 135 LQR 1; P. Davies,
‘Varying Contracts in the Supreme Cour t’ (2018) 77 CLJ 464; J. Fisher, ‘Contract Variation in
the Common Law:A Critical Response to Rock Advertising v MWB Business Exc hange’(2018) 47
Common Law World Review 196;M. Roberts, ‘No Oral Modication Clauses in New Zealand –
Now What Do We Do?’ (2019) 28 New Zealand Universities Law Review 475.
8 J.Morgan, Great Debates in Contract Law (London: Red Globe Press, 3rd ed, 2020) 51.
of Contracts – Should Time Now be Called?’[2021] JBL 405; M.R.Tan,‘Contractual Variations:
Long Live the Doctrine of Consideration?’ (2021) 80 CLJ 235.
© 2021 The Author.The Modern Law Review © 2021 The Modern Law Review Limited.
(2022) 85(6) MLR 1534–1549 1535
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