Written Contracts May be Modified by Subsequent Oral Agreement
It is the well-settled law of Pennsylvania that a written contract may be modified by a subsequent oral agreement by either words or conduct; and an oral modification of a written contract may be implied from a course of conduct, including acquiesce in the modification through a course of conduct consistent with acceptance.
In Muchow v. Schaffner, 119 A.2d 568 (Pa. Super. Ct. 1956), Plaintiff and Defendant entered into a written contract in which Plaintiff was to construct a building for Defendant that met certain specifications. After the agreement was executed, Plaintiff realized he could not build the building as specified in the agreement because the ground would not support it. Plaintiff called Defendant and a conversation took place in which Defendant agreed orally to the new specifications that contradicted what was written in the written contract. It was proven at trial that Defendant knew the extra work would not have to be done but for the oral agreement. When the building was finished it was materially different from the original agreement and Defendant refused to pay Plaintiff, and relied on the parol evidence rule. The Court sided with the Plaintiff and found the parol evidence rule did not bar the evidence of the oral agreement.
Furthermore, a written contract may be modified by a new contract implied from conduct or an express oral agreement, even where there is a provision expressly prohibiting non-written modifications, and a party’s conduct in accepting an oral or implied modification of a written contract can result in a waiver of language requiring all modifications to be written. First Nat’l Bank of Pa. v. Lincoln Nat’l Life Ins. Co., 824 F.2d 277, 280 (3d Cir. 1987).