Florida Business Litigation Lawyer Blog
As the United States Supreme Court explained in Nw Nat’l Life Ins. Co. v. Riggs, 203 U.S. 243 (1906), the freedom of contract is a constitutionally protected right. Contracting parties are free to address any issue they choose, including the question of whether their agreement may be modified at all and, if so, how. When contracting parties elect to adopt a term or condition, including one addressing the question of modification, it is not the province of a court to second guess the wisdom of their bargain, or to relieve either party from the burden of that bargain by rewriting the document. In Int’l Expositions, Inc. v. City of Miami Beach, 274 So.2d 29 (Fla. 3d DCA 1973), Florida’s Third District Court of Appeal stated that “courts may not rewrite, alter, or add to the terms of a written contract between the parties and may not substitute their judgment for that of the parties in order to relieve one from an alleged hardship of an improvident bargain.” It is instead the court’s duty to enforce the contract as plainly written. For example, in Rybovich Boat Works, Inc. v. Atkins, 587 So.2d 519 (Fla. 4th DCA 1991), the appellate court reversed the trial court’s refusal to give effect to an unambiguous “anti-waiver” clause in the parties’ written contract. Peter Mavrick a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.
Under Florida law, a contractual provision barring oral modification will generally be enforced because this is plainly what was agreed by the parties. There are, however, exceptions to this legal principle. One of the most important exceptions arises from important precedent from the Supreme Court of Florida in Professional Insurance Corp. v. Cahill, 90 So.2d 916 (Fla. 1956), which held that even when an agreement expressly forbids oral modifications, “[a] written contract or agreement may be altered or modified by an oral agreement if the latter has been accepted or acted upon by the parties in such a manner as would work a fraud on either party to refuse to enforce it.” The Cahill decision did not elaborate on precisely what is required to prove that an alleged oral agreement had “been accepted and acted upon by the parties,” or under what circumstances a failure to enforce such a modification would “work a fraud.” Florida’s Fourth District Court of Appeal in Okeechobee Resorts, L.L.C. v. E Z Cash Pawn, Inc., 145 So.3d 989 (Fla. 4th DCA 2014), followed the Supreme Court’s precedent in Cahill, and further developed the legal standard to assess enforcement of contractual clause barring oral modification. Okeechobee Resorts explained in pertinent part: “Cahill undoubtedly remains our Supreme Court’s governing precedent on the question of when a party may enforce an alleged oral modification of a written contract which expressly requires that any modification be in writing. There also is no doubt that Cahill requires that a party pursuing such a claim allege and prove more–indeed much more–than just a ‘mutual agreement,’ or just ‘detrimental reliance,’ or just ‘subsequent conduct,’ or just generalized ‘inequitable conduct.’ Rather, a plaintiff must again allege–and eventually prove–that the oral amendment was ‘accepted and acted upon by the parties in such a manner as would work a fraud on either party to refuse to enforce it.’ This requires that a plaintiff plead (and again eventually prove): (a) that the parties agreed upon and accepted the oral modification (i.e., mutual assent); and (b) that both parties (or at least the party seeking to enforce the amendment) performed consistent with the terms of the alleged oral modification (not merely consistent with their obligations under the original contract); and (c) that due to the plaintiff’s performance under the contract as amended the defendant received and accepted a benefit it otherwise was not entitled to under the original contract (i.e., independent consideration). Absent such a showing, the parties will be held to the bargain as negotiated and memorialized in their written agreement.”
Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.