Can parties modify a contract through conduct despite a written modification clause? iDrive Logistics v. Adagio Teas Explained

In iDrive Logistics v. Adagio Teas, the Utah Court of Appeals addressed whether parties can modify a contract through their course of conduct even when the contract expressly requires written modifications. The court’s analysis provides important guidance for Utah practitioners on contract interpretation under Delaware law.

Background and Facts

Adagio Teas contracted with iDrive Logistics (Kenco) for shipping discount services, with disputes arising over billing rate calculations. After negotiations, Kenco proposed a compromise 10.5% rate “moving forward” and offered to credit past invoices using this adjusted rate. Adagio accepted the credit and subsequently paid four invoices calculated at the new rate before refusing further payment. The original contract contained a clause requiring that modifications “be reduced to writing” and executed by authorized representatives.

Key Legal Issues

The primary issues were whether the parties had modified their contract through their course of conduct despite the written modification requirement, and whether Adagio’s payment of four invoices at the adjusted rate constituted mutual assent to the modification moving forward.

Court’s Analysis and Holding

Applying Delaware law, the court held that written modification clauses can be waived through the parties’ course of conduct. The court emphasized that mutual assent depends on “external expression of intention as distinguished from undisclosed intention.” The parties’ email exchanges and subsequent conduct—accepting the credit and paying invoices at the adjusted rate—objectively demonstrated intent to be bound by the modified terms. The court rejected Adagio’s post-hoc affidavits claiming it paid invoices only as a “trial basis,” noting that subjective intent is irrelevant under Delaware’s objective standard.

Practice Implications

This decision reinforces that contract modifications require objective manifestations of mutual assent, not subjective intentions. Practitioners should advise clients that accepting benefits under proposed contract changes and continuing performance can constitute binding modification regardless of internal reservations. When defending against modification claims, focus on objective evidence contemporaneous with the alleged modification rather than post-dispute affidavits about subjective intent.