Varying a contract legally in Australia involves more than just agreement – it requires careful attention to legal principles and documentation.
This guide, by our contract lawyers, helps small businesses and consultants understand how to make enforceable changes and avoid costly disputes.
Key Takeaways
Both parties must genuinely agree to the variation, with adequate consideration (something of value exchanged).
All changes should be clearly documented in writing (avoid informal or verbal agreements).
Unilateral changes (made by only one party) are generally unlawful and may lead to disputes.
Ensure the variation complies with the original contract’s terms and any applicable laws.
Understanding the Legal Rules for Contract Variation
Varying a contract in Australia requires compliance with both statutory requirements and common law principles. Together, these legal rules ensure that any contract change is valid, enforceable, and made with genuine agreement from both parties.
For guidance on changing employment agreements specifically, read our article on how to vary an employment contract under Australian law.
1. Statutory Requirements
Statutes (laws enacted by Parliament) may impact how contracts can be varied (especially in regulated industries or where consumer or employment laws apply). When planning a contract variation, businesses must consider whether:
The contract is subject to legislation that restricts or prescribes how terms can be changed.
The variation could breach a law or regulation, such as unfair contract term laws under the Australian Consumer Law.
Specific types of contracts (e.g. employment or construction) require variations to be documented or agreed to in writing.
Tip: Always check for industry-specific legislation before making changes.
2. Common Law Principles
In addition to statutory rules, common law (judge-made law) sets out foundational principles for valid contract variation. These include:
Offer and Acceptance: There must be a clear offer to vary the contract and explicit acceptance by the other party.
Consideration: Each party must give something of value. For example, a client may agree to pay more in exchange for faster delivery.
Intention to Create Legal Relations: Both parties must intend for the change to be legally binding.
Consent: Consent must be given freely. Changes made under pressure or without full understanding may be invalid.
These principles ensure that contract changes are mutual, fair, and enforceable.
Check out our guide to unenforceable contract terms to learn more.
Step-by-Step Checklist: How to Vary a Contract
1. Review the Existing Contract
- Check for a variation clause outlining how changes can be made (usually requiring written agreement by both parties).
- Look for entire agreement clauses which may void informal or verbal changes unless formally documented.
- Assess if the proposed change affects key terms such as price, delivery, or obligations.
2. Consult with the Other Party
- Notify the other party of major changes
- Explain the effects of the changes
- Invite feedback and allow time for consideration
Even if not required, consulting with the other party builds trust and reduces the risk of disputes. Always document all discussions and communications.
3. Ensure Consent is Freely Given
- The other party must understand the changes, have time to consider them, and not be pressured or coerced.
- Consent obtained through duress or misinformation can invalidate the variation.
4. Formalise the Variation in Writing
Options include:
- A Deed of Variation
- An amended contract
Best practice is to:
- Reference the original contract
- Clearly outline what is changing
- Specify the effective date
- Ensure both parties sign and retain copies
5. Provide Valid Legal Consideration
Every contractual variation must be supported by something of value, such as:
- Adjusted payment terms
- Additional services
- Extended delivery deadlines
Simply “continuing the contract” may not always count as valid consideration unless expressly agreed in writing.
6. Update Internal Systems and Notify Stakeholders
- Update records, accounting systems, and any relevant registers
- Inform third parties (such as insurers or regulators) if the change affects obligations or coverage
- Brief relevant personnel to ensure consistent application
7. Avoid Unlawful or Unilateral Variations
Certain terms cannot be altered even with consent if they would breach statutory requirements or public policy. It’s important for businesses to confirm a proposed change will not breach statutory requirements before they seek to implement the change.
Unlawful variations risk claims such as breach of contract or damages.
If you are a small business owner or consultant needing help with contract variations or want to ensure compliance with Australian contract law, contact our team today. We provide tailored advice to support your business growth and contractual relationships.
Drafting Tips for Contract Variations
The following table outlines practical drafting tips to help small businesses and consultants avoid disputes and ensure enforceability:
Tip | Why It Matters |
Avoid oral agreements | Hard to prove and easily misinterpreted |
Use clear, plain language | Reduces disputes over meaning |
Specify the effective date | Ensures clarity for all parties |
Reference original clauses | Shows exactly what’s changing |
Avoid retrospective changes | Risk of disputes and backpay claims |
Use consistent terms | Prevents ambiguity or contradictions |
Attach as annexure | Keeps variation tied to the original contract |
Provide examples of consideration | Reinforces legal enforceability |
Frequently Asked Questions
Can a contract be varied by email exchange?
Yes, provided both parties clearly agree to the new terms in writing, an email exchange can constitute a valid contract variation under Australian law. However, it is best practice to formalise changes in a signed document to avoid ambiguity.
What if one party refuses to agree to a variation?
If a party refuses to agree to a variation, the existing contract remains in force. Changes cannot be implemented unilaterally.
Can a contract be varied orally?
While oral variations may be valid in some circumstances, they are difficult to prove and may be unenforceable if the contract requires written changes.
Does consideration always have to be monetary?
No, consideration can take many forms, including goods, services, or other agreed value.
Do variations need to be lodged with a government authority?
Generally, no. Variations to most contracts do not need to be lodged unless required by specific legislation or regulatory frameworks.
What’s the difference between a contract variation and a variation claim?
A variation claim is a formal request (often in construction or service contracts) for extra time, payment, or changes beyond the original contract scope.
In contrast, a contract variation is a mutually agreed change to the contract’s terms. Variation claims typically arise when one party believes they’re entitled to adjustments due to additional work or unforeseen circumstances.
For a deeper explanation, read our full guide: How to Make a Variation Claim
