Tacit agreement to replace an agreement is not a variation

Our law recognises that an agreement can be concluded tacitly to replace a previous agreement and a non-variation clause does not preclude the parties from doing so. This principle was recently confirmed by the Supreme Court of Appeal. In Ocean Echo Properties v Old Mutual the parties were contracting under a lease. The landlord sued the tenant for rental and other charges in arrears. The tenant pleaded that they had abandoned the premises at an earlier date when they were not in arrears. The tenant alleged that the landlord had subsequently entered into a tacit agreement with a new tenant. By allowing the new tenant occupation and receiving rental from her, the previous tenant pleaded that the landlord had subsequently entered into a tacit agreement with the new tenant. That tacit agreement, if proved, would have the effect of terminating the operation of the original lease in respect of future obligations, leaving intact the obligations that arose from the past operation of…

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