‘Notices’ clauses in your commercial contracts: please take notice!

Lawyers often refer to commercial contracts containing ‘boilerplate’ clauses. For example, clauses containing provisions that are very standard but nevertheless serve a useful purpose and should still be considered for each contract.

One such boilerplate clause is the ‘notices’ clause. In this article we set out a checklist for your notices clauses and explain why you should take notice!

Notices clauses checklist

A well-drafted notices clause should set out:

• the form a notice given in connection with the contract should take e.g. in ‘writing’ (which then itself may be defined elsewhere in the contract, for instance to clarify whether emails are or are not included);
• how a notice must be sent by one party to the other(s) (e.g. by registered post);
• when a notice sent is deemed to take effect (e.g. 1 day after posting, on transmission of an e-mail according to a print-out obtained by the sender);
• how one or more of the parties may change details in the notices clause; and
• whether or not the clause applies to service of documents in legal proceedings.

Five important tips about notices clauses

1. Reduced costs– We frequently review notice clauses requiring a party to send notices by e.g. first-class post or hand delivery and specifically not allowing use of email, when there is in fact no practical need for this. Ensuring your notices clauses allow the parties to send notices by e-mail will help you (and them) avoid incurring the unnecessary the costs of printing, envelopes and stamps and courier services.
2. Strictly held to – Notice provisions must be strictly held to and there are many cases where the claim has failed because the notice was not delivered as required on time. For example, as a supplier if the notices clause in your supply contract says a notice to terminate must be sent by registered post, and you attempt to send the notice by e-mail instead, it will not be valid. Also note that if there is a double condition, for instance where notice must be served as soon as possible after an event occurring but in any event by a stated date, both conditions must be satisfied.
3. Serious consequences– Failing to send a notice in accordance in the notices clause in your relevant commercial contract could have serious consequences. Not only may the notice itself be invalid (see above paragraph) but your act of sending the purported notice may amount to a breach by you (i.e. saying you want to terminate but without actually doing so effectively) which in turn could give the other party, e.g. your customer, the right to terminate your contract. Depending on how your contract is worded, this could lead to termination being on grounds not as favorable to you as the supplier.
4. Relevance– We frequently review notice clauses that seem archaic or outright illogical when compared to the rest of the contract e.g. a notices clause in a software contract between two parties based in the UK only allowing notices to be sent by registered, first-class post or airmail! Ensuring your notices clauses are relevant and logical compared to the rest of the terms will help you demonstrate to the other party/ies that you are serious about, and pay attention to, your contracts’ terms.
5. The environment– An added bonus is that sending a notice by e-mail is generally going to be more environmentally friendly than sending it by post, hand delivery or airmail.

What to do about notices clauses:

1. Review– Review the notices clauses in your commercial contracts. For each contract, check whether the notices clause sets out what it should set out according to our checklist above. If the notices clause contains names and/or addresses (including e-mail addresses), check these are up-to-date and relevant. Check whether any specific sections of your commercial contracts have their own requirements on notices, e.g. the section governing termination.
2. Revise– Update the notices clauses in your template commercial contracts or T&C’s to make them relevant and logical for the contract. In respect of your commercial contracts which are already signed, consider whether updating the notices clause would be beneficial. If it would, formally vary the contract to do this in accordance its wording governing variation. Note, this may require the variation document to be signed by all the parties (or their representatives). For example, allow notices to be served by e-mail and/or remove the requirement for notices to be served by a method that in practice would never be used e.g. delivery by air mail. From a contracts management perspective, if you are concerned about notices received by e-mail getting lost in an inbox, consider setting up an e-mail address exclusively for receipt of notices in connection with your commercial contracts and spell out in the notices clauses how the other party/ies should send the e-mail notice to you e.g. by requiring the e-mail header to state ‘Our {title of agreement} dated {date}’
3. Refer– Once you have made any changes to the notices clauses in your commercial contracts templates or you need to vary your contracts to update the notices clauses, refer these draft changes to a commercial solicitor. This is important. The solicitor will be able to ensure such changes are legally valid and appropriate, which is critical if the changes will be incorporated into your future commercial contracts.

Commercial contract legal advice

Our corporate and commercial law teams specialises in drafting, negotiating, reviewing and advising on all aspects of commercial contracts across a range of sectors for SMEs and large businesses.