15 Jan 2013

Is Your Contract Notice provision up to date?

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What is a Notice Provision Anyway?

Almost any contract that is properly drafted will have a “Notice” provision or clause. This clause states where the parties are agreeing to receive notices about matters relating to that contract. This clause is almost always treated as an afterthought. It is an item that should be periodically reviewed.

Why Does it Matter?

Unfortunately the first time the parties look at a contract after it is signed – is when something goes wrong and personal visits, email or telephone calls are not working to resolve the problem. At that point, the aggrieved party is going to want to give formal notice of its claim. Not only will the contract provide the address you agreed to use for notices, but if notice is sent to that address according to the procedure provided in the contract, your time to respond starts to run.

What you Should Do.

If you have moved and not updated your address, your rights under the contract may be jeopardized.There is much case law that holds parties to strict compliance with these clauses. Most contracts provide that you can change the address for notices, but you have to remember to do this. If the other party complies with the Notice provisions and you do not actually get the notice, your failure to keep it updates can be held against you.

If you Have to Give Notice

If a situation occurs where you have to notify the other party of your rights under the contract, pull it out and review what the contract says you have to do and follow that procedure to the letter. You might think that a email or fax might be sufficient. After all “I know they received it” seems to be a rational thought. Unfortunately, it may not be enough and if the contract does not permit notice that way – it is ineffective.

What about Electronic Notice?

While most business has moved into electronic communications, that does not mean that the law is keeping up. This is an ongoing discussion because general email services are not good providers of confirmation of receipt, confirmation of date or receipt or confirmation that the exact content has been transmitted. An email sent to the other party and to yourself, a common practice, is really not legally sufficient. There are some services such as RPost http://www.rpost.com/ and Verisign http://www.verisign.com/ which is now owned by Symantec which provide services that can confirm delivery and receipt of emails. These companies take the position that their services meet legal requirements. They well may, but I have not researched any cases challenging their claims and would not my clients to be involved in a test case.

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