In the recent case of Mr Alastair Dobbie v Paula Felton T/A Feltons Solicitors, the Employment Appeal Tribunal ruled that a consultant, whose contract contained “entire agreement” and “no oral variations” clauses, could not argue that there had been a separate verbal agreement to change its terms. The case acts as an important reminder to carefully review contracts before signing them, and to pay attention to boilerplate clauses.
Background
Alistair Dobbie was a lawyer who entered into a consultancy agreement with Feltons Solicitors as a contractor. Under the contract he was entitled to 40% of the fees paid by clients for work which he had carried out and invoiced himself, with the other 60% going to Feltons. The contract provided that any alterations to its terms had to be agreed in writing and signed by both parties; there could be no oral variation. The contract also contained an ‘entire agreement clause’, meaning that the written contract superseded all other contracts or agreements between the parties.
This case related to fees received by Feltons from one of Mr Dobbie’s clients, where the actual work had been carried out by other lawyers. Mr Dobbie contended that he was entitled to 40% of the full fee paid by the client, irrespective of whether he had done the work personally. This line of argument was clearly contrary to the express terms of his consultancy agreement, so he argued that Feltons had entered into a separate verbal agreement with him to vary the terms of the contract in relation to this particular client.
Tribunal and Appeal Decisions
Mr Dobbie lost his case at the Employment Tribunal in December 2020 and appealed to the Employment Appeal Tribunal (“EAT”). He was, unsurprisingly, unsuccessful at the EAT as well. The judge centred his argument around the “entire agreement” and “no oral variations” clauses, which provided that contract could only be altered in writing. The judge concluded that Fentons had not verbally agreed to vary Mr Dobbie’s contract such that he would receive 40% of all fees paid by the client in question, even though other solicitors had done the work. Even if Fentons had agreed this, the oral agreement would not be valid in any event, as it was not made in writing and signed by both parties as required by the contract. The Judge therefore confirmed that there had been no unlawful deduction from Mr Dobbie wages, and he was not entitled to any further remuneration beyond what he had already received.
Comments
“Boilerplate” clauses such as these can often be overlooked and might sometimes be removed in an effort to shorten or simplify contracts, but this case demonstrates the importance of understanding every clause, even seemingly minor or standard ones.
Employers should consider taking legal advice before drafting or reviewing contracts, to ensure they clearly understand how the contractual terms will regulate the relationship between the parties. Contracts should also be regularly reviewed to take into account changes in the law.
With the rise of artificial intelligence and the use of platforms such as ChatGPT, it is easy to use software to generate clauses or even full contracts to avoid legal costs. Whilst AI certainly has its place, its outputs should be carefully reviewed. The danger of blindly relying on a template contract prepared by a third party or one prepared by AI is evident; you may end up in a situation where a boilerplate clause or a rogue definition prevents a contract from being interpreted in the way you had initially intended, sometime with costly consequences.
