Deed of Variation

How do you vary a contract?

When you are looking to vary or change a contract the first thing you should do is look to follow what the contract says you must do in order to vary the contract. Usually the contract will have a clause that says something like this:

The parties agree that this agreement can only be varied in writing and the variation must be signed by both parties.

Using this clause as an example, this would mean that you would need to set out in writing exactly how the parties want to vary the contract and then both parties would need to sign a document that gives effect to this – and that’s where a Deed of Variation comes into the picture.

What if the contract says nothing about how to vary or amend it?

The parties to a contract are always at liberty to agree between themselves that they want to change a contract. So even if there is no variation clause like the one mentioned above the parties to the contract can agree to vary their contract using a similar method, or even by using a different method. We recommend that all variations to a contract be in writing, always. That way there is no doubt as to what has been agreed between the parties.

Do you really need to make the variation a ‘Deed’ or will a simple contract be ok?

The short answer to this is ‘no’ – a variation does not need to be in the form of a deed, but it is the safest way to vary a contract. Why? Well a deed does not need consideration (whereas a contract does) so if the parties vary their contract by way of Deed then you never need to worry about whether consideration has been properly given between the parties. Take our word for it… deeds are the way to go.

Can a Deed of Variation be used to make any change I want to my contract?

A Deed of Variation can be used in most circumstances but it can’t be used to vary a party to the contract, i.e. it cannot be used to remove one party to the contract and then add another party to the contract – you would need a Deed of Novation for that.

How many times can you vary a contract?

Simple – as many times as you like. Here is a good example, we worked on a contract that is for the software that is used by air traffic controllers to control/run/administer Australian airspace. That contract had been varied no less than 363 times! Obviously it was tough, after all those variations, to work out exactly what the current agreed contractual position was, but that’s what keeps lawyers busy. Well it kept me busy!

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