VARIATION OF TERMS OF A CONTRACT The general rule is that a party to a contract must perform exactly what he undertook to do.

Put another way, parties are bound by the terms of their contract, and each party must perform its obligations under the contract in the exact manner prescribed by the contract. Parties to a contract may, however, effect a variation of the contract by modifying or altering its terms. The general rule here, again, is that such a variation can only be effected by mutual agreement i.e. one party cannot, as a general rule, unilaterally claim to have varied the terms of a contract. A variation of the terms of a contract by mutual agreement is valid and enforceable; and can be set up by a party to the contract as a defence to an action against him on the original contract. However, a mere unilateral notification by one party to the other, in the absence of any agreement, cannot constitute a variation of a contract.1 Whereas a notification by one party to the other without an agreement cannot constitute a valid variation of the terms of a contract, at common law, a party to the contract may unilaterally vary the obligations of the parties to the contract (the terms of the contract) if the contract confers upon him that power. In other words, a contract may validly give to one contracting party the power to unilaterally vary the obligations of the parties to the contract.2 In this sense, the requisite agreement of the contracting parties to the variation is assumed to have been reached at the point of making the contract. In a situation where the contract does not authorise either party to unilaterally vary its terms, therefore, for any variation to be valid it must be as a result of the agreement of the parties. Indeed, such a requirement for agreement is also applicable with regard to waivers (or forbearance) and rescission. If, therefore, a party that is not authorised by the contract to vary its terms unilaterally proceeds to act upon its notification to the other party, ostensibly varying the contract, and fails to (fully) perform its obligations on that account, such failure amounts to breach of contract and the usual remedies are available to the other parties affected by the breach.

E.G. McKendrick, Discharge by Agreement (Variation) in Chitty on Contracts, 28 th Edition, Vol. 1 at

1155 (Para. 23-032) . See also: Cow ey v Liberian O perations Ltd. [1966] 2 Lloyds Rep. 45
2

Ibid (Chitty on Contracts) at 1158 (para 23-038)