Running a business often means that legal agreements need to change as circumstances evolve. Instead of tearing up an existing contract, lease, or other document and starting over, UK law allows parties to use a deed of variation to amend the original agreement. In simple terms, a deed of variation is a legal document that lets you modify an existing contract or other legal instrument in a binding way, without having to rewrite the whole thing from scratch.
Businesses use deeds of variation to update important terms (for example, extending a lease or changing a payment schedule) or to correct mistakes in the original document, all while keeping the rest of the agreement intact and enforceable.
This blog post explains what a deed of variation is, why it is used, how to execute one properly, and common scenarios where it might help your business.
What is a deed of variation?
A deed of variation is a formal, legally binding document used to change (or ‘vary’) the terms of an existing agreement. The key point is that the original agreement remains in place – the deed simply modifies specific provisions. This avoids the cost and inefficiency of drafting a brand-new contract or lease every time a change is needed. Once executed, the new terms become part of the original agreement, as if they were there from the start.
For example, in a commercial lease, a deed of variation can adjust rent, extend the term, or correct drafting errors. In business contracts, it can alter payment terms, update deliverables or timelines or add a new party – all without invalidating the original agreement. In each case, the deed ‘plugs in’ the agreed changes and leaves the rest of the document intact.
When might you use a deed of variation?
Deed of variation is commonly used in business to:
- update commercial terms (e.g. pricing or delivery obligations)
- add or remove a party to an agreement
- correct mistakes or ambiguities
For SMEs, these situations often arise in long-term supply contracts, service agreements, or shareholder arrangements. Using a deed of variation ensures that updates are captured formally and reduces the risk of later disputes.
If you are considering a deed of variation specifically for a lease, see our separate blog post Deed of Variation of a Lease – A Trap for Tenants.
Why use a deed of variation?
There are both legal and practical reasons to use a deed rather than an informal change:
- cost-effective and convenient: you can make targeted updates without drafting a new agreement.
- enforceability without consideration: under UK contract law, an ordinary amendment typically requires ‘consideration’ (something of value exchanged) to be binding – unless it’s made as a deed. One major benefit of a deed of variation is that it does not require fresh consideration to be enforceable. This is crucial if only one party is benefiting or conceding something in agreeing to enter into the deed of variation. Using a deed guarantees the variation is legally binding even when no additional payment or benefit flows from one side to the other. In short, a deed of variation lets you skip the need for “quid pro quo”, which a simple contract amendment would normally require.
- compliance with contract terms: many agreements specify that any variations must be in writing and “signed” by the representatives of the parties, sometimes even requiring a deed. Using a deed ensures you follow the correct process and avoid invalid amendments.
- clarity and certainty: a deed of variation is a formal, signed record of the agreed change. The added layer of formality and detail can prevent misunderstandings later about what was changed and whether it was agreed to. By clearly documenting the new terms, a deed of variation provides certainty and helps avoid “he said/she said” scenarios down the road. Parties often choose a deed for important changes to have extra assurance that the variation will hold up and that everyone is on the same page.
- continuity of the agreement: using a deed of variation keeps the existing contract alive and continuous, which can be important for long-term deals. All the untouched terms of the original contract remain in full force. This means any benefits tied to the original agreement (such as accumulated rights, security of tenure in a lease, or guarantees) carry on uninterrupted. Varying an agreement can thus be preferable to terminating and signing a new one, especially when the relationship is ongoing.
Note: if the changes needed are very extensive, essentially reshaping the deal entirely, drafting a new agreement may be more practical. The decision usually depends on how fundamental the changes are and the bargaining position of the parties.
Limitation
When a ‘simple’ contract is executed (i.e. any contract that is not a deed), the time limit to bring a claim for breach of contract is 6 years. This is otherwise known as the limitation period. Claims brought outside the limitation period will be ‘time barred.’ Therefore, the party that committed the breach will have a full defence to any claim for breach of contract.
When a contract is executed as a deed, the limitation period is generally 12 years (although it is 6 years for claims for arrears of rent and arrears of interest under a mortgage). Because of the way contractual limitation periods work – the clock starts to run regardless of whether the innocent party knows about the breach or not – the 12-year extended period can be valuable.
That begs the question – what happens if a simple contract is varied by a deed of variation? The law will treat the variation as a new obligation created by the deed of variation. Therefore, any breach of contract arising out of the variation will have a time limit of 12 years. But the 6-year time limit for any breaches arising out of the original contract will remain in effect.
The deed of variation, however, might change some fundamental terms of the original agreement – and the 12-year limitation period may apply. This could have unexpected consequences if not considered correctly.
How to execute a deed of variation?
To be valid under UK law, a deed of variation must follow certain formalities:
- in writing and expressed as a deed: the document should clearly say it is executed as a deed.
- signed by all relevant parties: everyone bound by the original agreement (and any new party being added) should sign.
- proper execution:
- Individuals: signature witnessed by an independent adult who also signs.
- Companies: executed in accordance with the Companies Act 2006 (e.g. 2 authorised signatories – directors and company secretary – or one director with a witness).
- dated and delivered: usually on the date the last party signs, ‘delivery’ reflects the intention to be bound.
Common scenarios where a deed of variation can help
For businesses, deeds of variation are a practical way to keep agreements up to date without starting from scratch:
1. commercial leases: landlords and tenants often use deeds of variation to extend or renew leases, adjust rent payments, or fix errors without renegotiating the entire lease.
2. commercial contracts: if two companies are working under an existing contract but want to adjust payment schedules, change deadlines, or alter service levels, a deed of variation makes those changes legally binding without needing a brand-new contract.
3. adding or removing parties: sometimes a new business partner or affiliate needs to be added to an agreement, or an existing party steps away. A deed of variation allows the contract to be updated to reflect the new parties.
4. regulatory or legal changes: laws and regulations can shift during the life of a contract. A deed of variation is often the cleanest way to update agreements, so they remain compliant without rewriting them entirely.
In all these cases, the deed ‘slots in’ to the existing agreement, making the change clear, enforceable, and part of the original contract.
Conclusion
Deeds of variation are a practical way for businesses to adapt existing agreements while keeping the rest of the deal intact. They save time, reduce costs, and give certainty, making them especially valuable when agreements need to evolve with changing circumstances.
Handled correctly, they offer a safe and efficient solution. But if drafted poorly, they can create confusion and risk. For example, a supplier agreeing to use a deed of variation could keep it exposed to claims for another 6 years. This can have knock on effects in many ways – from insurance premiums to company valuation.
Get in touch
At EM Law, we help start-ups and SMEs keep their contracts and leases fit for purpose as their businesses evolve. If you’re considering a deed of variation or want to understand whether it is the right option for your situation, our team can guide you through the process and draft the documentation you need.
Please feel free to reach out to one of our commercial law experts – Neil Williamson or Colin Lambertus– directly, or feel free to contact us here.
