Is Luis Suarez right: Does an oral agreement between parties vary the terms of their written agreement?

Is Luis Suarez right: Does an oral agreement between parties vary the terms of their written agreement?


Author: Mathew Cole and James Modley

Last weekend heralded the return of the Premier League football season, and the spotlight for the foreseeable future for clubs, players and fans is firmly fixed on potential transfer business before the transfer window closes.

Player power, loyalty and respect of contracts has increasingly made media headlines, demonstrated predominantly this summer with Luis Suarez of Liverpool FC and Manchester United's Wayne Rooney.  

As widely reported, Arsenal FC made an infamous bid of £40,000,001.00 to Liverpool for the transfer of the registration of Suarez to Arsenal. The bid by Arsenal triggered a clause in Suarez's agreement with Liverpool, that he be notified of any transfer offers received for the transfer of his registration.  

Following Liverpool's rejection of Arsenal's bid, Suarez gave an interview to national papers in which he stated that Liverpool had breached an oral agreement reached between the parties, that if the club did not qualify to participate in the Champions League for the 2013/14 season, Liverpool would allow Suarez to leave the club. The existence of the oral agreement has been denied by Liverpool manager Brendan Rodgers.  

Irrespective of whether or not an oral agreement was reached, can the terms of a fixed term contract be varied by an oral agreement and what powers, if any, does a modern professional footballer hold?  

Professional footballers in the modern era are generally employed on fixed term contracts, which, unless in certain circumstances, do not entitle the parties to terminate the agreement before the end of the fixed term.  

Clubs and players generally have the ability to seek to terminate their agreement in certain circumstances, i.e. gross misconduct, as can be seen by Chelsea FC terminating its agreement with Adrian Mutu in 2004, as a result of Mutu testing positive for Cocaine (Adrian Mutu v Chelsea Football Club Limited [CAS 2008/A/1644]).  

Whilst players often play the trump card of handing in a transfer request, this is not a contractual entitlement akin to notice of termination of their agreement, but simply forces the club to take a commercial decision based upon a number of factors such as negative publicity, team morale and finances.  

What is the impact of an oral variation to a written fixed term contract?

Written contracts, including fixed term contracts, can be varied by way of oral agreement if both parties are mutually agreeable to the variation and agree to dispense with the formalities, but this does not offer the ultimate protection of any variation being detailed in writing.  

If the parties vary a written contract by oral agreement, this leaves either party vulnerable to allegations that the terms varied were not agreed upon, should a dispute arise in the future. It is always extremely difficult to provide substantial proof of the terms varied by oral agreement as quite simply they are not documented.  

Many written contracts contain express terms which detail that any variation of a contract cannot be deemed enforceable, unless stipulated in writing. This protects both parties from allegations that may arise in the future concerning the terms of the oral agreements. However, parties must also be aware that it was held in World Online Telecom Ltd v I-Way [2002] EWCA Civ 413 that there is no direct authority on the question whether parties could prevent oral variations of a contract through the use of such a clause.  

Contractual variation clauses often detail whether and how one or more of the parties can amend the contract. Whilst it is possible to sidestep such a clause by oral agreement, including such a clause has its benefits. It is designed to guard against informal or unintended variations and therefore provides greater certainty for contracting parties.  

Practical implications

It is possible to alter a written contract by oral agreement, although if one party disputes this there will be evidential hurdles to overcome.

It is advisable, for evidential and practical terms, for parties to ensure that any agreed amendments to their agreements reflect the variation clauses outlined within their contracts. This could help avoid unwanted litigation relating to alleged breaches of contract.  

If you are in any doubt about what to do, seek legal advice.