Legal Question in Business Law in California
waiver of breach of contract cause of action?
If a contract requires all modifications to be in writing and a party fails to do so, can that party later sue for breach of contract or will their failure to comply with the contract terms result in a waiver of their right to a breach of contract cause of action?
4 Answers from Attorneys
Re: waiver of breach of contract cause of action?
It depends. If the other party acted in reliance on the modification, they might be estopped from or waived the writing requirement.
Re: waiver of breach of contract cause of action?
Not necessarily. If the changes were agreed to verbally and the work was performed in accordance with the verbal change, then the verbal modifications might be valid. Much depends on the exact circumstances of how the change occurred.
Re: waiver of breach of contract cause of action?
The answer depends upon the facts, but you have not provided any. There is no way to answer yes or no without knowing what the contract says, what change was made and under what circumstances.
Re: waiver of breach of contract cause of action?
Civil Code section 1698(b) provides that a written contract can be modified by an oral agreement "to the extent the oral agreement is executed by the parties." Executed in this sense means "performed" or "carried out" and not "signed."
It is not clear what you mean by "a party fails to do so" - a written modification, or any modification for that matter, would have to be concurred in by all parties.
If X and Y are the parties to a written contract, and X and Y later orally agree to a modification, and X performs according to the modified terms, X is not in breach, but if the oral modification called for Y to pay a higher price for X's different performance, X may not be able to force Y to pay the greater amount. However, if Y has paid the greater amount, the oral modification is then fully executed, the written contract stands modified thereby, and Y cannot later sue to recover an excess payment.
Further, a written contract can be canceled and superseded (a "novation") by an oral agreement. Whether this happened in your case is also fact-dependent.
Generally, a breaching party can sue on a contract, but unless the other party is also in breach, the remedy is probably limited to restitution of any benefits conferred, less damages.
The law in this area is somewhat complex, and without more facts by which better to understand exactly what happened here, I cannot give you a more specific answer or comment on whether there may be a waiver or estoppel. Those things are very fact-specific.
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