Contract amendment

How BC law treats it

No BC statute governs contract amendments. Variation is a matter of common law. Traditionally, a promise to change a contract was enforceable only if the other party gave something new in return (fresh consideration). In Rosas v Toca, 2018 BCCA 191, the Court of Appeal for British Columbia held that a variation unsupported by fresh consideration may still be enforceable if the parties freely agreed to it, unless it was procured under economic duress, is unconscionable or raises other public policy concerns. Many contracts contain an amendment clause requiring changes to be in writing and signed by both parties. Courts generally respect these clauses, but parties can sometimes vary a contract by later conduct or be estopped from relying on the formal requirement if they have acted as though the change was agreed. Some contracts, such as those respecting land and guarantees, need signed writing under s. 59 of the Law and Equity Act, RSBC 1996, c 253, and an amendment that changes key terms should meet the same standard. A change to a guaranteed obligation made without the guarantor's consent can release the guarantor, unless the guarantee allows variations. In construction, change orders are a specific form of amendment governed by the contract's change procedure. In employment, a significant unilateral change to an employee's terms can amount to constructive dismissal.

What it means for your business

Contracts change constantly in practice: prices, deadlines, scope and payment terms shift by email and phone. Undocumented changes create disputes about what was agreed, and can release guarantors or create unintended waivers. A short signed amending agreement, or a clear email exchange confirming the change and stating that all other terms continue, protects both sides. Businesses should also check the contract's own amendment clause before relying on an informal change. Example: A Richmond distributor agrees by email to extend a customer's payment terms from 30 to 60 days. Because the change was freely agreed, it is likely binding under Rosas v Toca even though the customer gave nothing new in return.

Risks and common mistakes

Assuming a variation is invalid because no new consideration was given. Agreeing to changes by phone without written confirmation. Ignoring the contract's requirement that amendments be in writing and signed. Amending a guaranteed contract without getting the guarantor's consent. Pressuring a counterparty into a change, risking a finding of economic duress.