16 September 2019 - Post by:Claudia Barry
In NHS v Vasant, the Court of Appeal held that a contract had been validly varied and so the NHS could not terminate contractual arrangements under which dentists supplied Intermediate Minor Oral Surgery (IMOS) services.
Three dentists supplied general dental services to the NHS each under a GDS contract agreed in 2006. This contained an entire agreement clause, which was subject to a no oral modification clause.
In 2007, the NHS and dentists each entered into a contract for the supply of an IMOS service for 12 months. The fixed term of this IMOS contract expired but was continued by conduct.
The original 2006 GDS contract was purportedly varied in 2009 when the parties signed a contract variation agreement form which amended one “additional service” from “reserved” to “providing an… (IMOS) service”. The dentists continued to provide an IMOS service until 2016 when the NHS sought to terminate the arrangement.
The issue was whether the IMOS service had been incorporated into the GDS contract, or whether it continued under the IMOS contract. The NHS could only terminate the GDS contract if the dentists were in default (which they were not). Conversely, the NHS could terminate the IMOS contract by mere notice. Therefore, the NHS argued that the GDS contract was not validly varied because the bald reference to “providing an… (IMOS) service” contained no details of the service and the entire agreement and no oral modification provisions prevented reference to the IMOS contract to resolve this deficiency. The service must therefore be being provided under the IMOS contract that was terminable on notice.
The Court of Appeal disagreed with the NHS and agreed with the trial judge’s finding – though not his reasoning – that the IMOS service had been incorporated into the GDS contract. The judge had wrongly looked to contemporaneous correspondence, the oral evidence of the contracting parties and their post contractual conduct. In any event, the variation complied with the entire agreement and no oral modification provisions.
As to the meaning of “providing an… (IMOS) service” now governed by the GDS contract, under what is sometimes called the “private dictionary principle”, the Court of Appeal allowed extrinsic evidence, namely the IMOS contract, to give meaning to that unconventional expression. Crucially, only the description of the service was incorporated into the GDS contract, and that description did not include the termination provisions. Therefore the NHS could not terminate on notice.