Contractual notices and Coronavirus

With many people working from home and offices empty, concerns are coming up over the service of contractual notices by post or courier. These might be everyday notices or something more substantial, such as notice of a material breach, termination, force majeure suspension, change of control notices etc. Many notice clauses allow for a range of different options, but are these appropriate in the current circumstances? With the possibility of further lockdowns, possibly at short notice, organisations need to be prepared to respond appropriately.

I will focus on two perspectives: service of notices under existing contracts, and drafting new clauses.

Service of notices under existing contracts

Existing notices clauses should, if possible, be followed exactly. There are numerous cases indicating that courts expect mandatory notices clauses to be complied with (eg Zayo v Ainger). However, in the current circumstances it would be sensible to consider whether you should also contact the recipient of the notice in another way. You might contact the other party, for example by email, to warn them that notice is being served and provide a copy. Doing so might prevent an argument that it was unreasonable to serve by post/by hand on an unattended location.

The Government has published guidance encouraging ‘responsible contractual behaviour’ during the COVID-19 crisis. This refers to responsible and fair behaviour in relation to giving notices. The guidance is not legally binding, but it is possible that it would be persuasive in any future litigation.

A recent decision dealing with service of court papers (Stanley v London Borough of Tower Hamlets) acknowledged that the exceptional circumstances of the pandemic were sufficient reason to excuse a failure to respond. The court said that the claimant’s solicitor had been “at fault for not checking whether service by post was still possible and feasible. That was an obvious step which he should have taken.” Clearly, service of court papers is not the same as service of a contractual notice, but a court could take a similar approach given the exceptional nature of the current circumstances.

Any departures from the notices clause should be documented with the reasons why (for example, an agreement between the parties to a temporary change).

Drafting new notice clauses

When drafting new notice clauses you might wish to consider what would be appropriate for the transaction in the current circumstances. What is realistic for the parties involved? One option would be to require service by post and email (and require a party to confirm the email address before attempting service). 

We are aware of some clients specifying exclusively email service of notices in contracts. This may be appropriate for relatively short-term contracts, or where there is a reliably monitored email address. However, it will not always be appropriate depending on the likely duration of the contract, and the reliability of an individual email address.

Adding detail around the email addresses to be used by both recipient and sender (a sender email address can then be added to the ‘trusted senders’ list to prevent the message being marked as ‘spam’) can be helpful.  Where notice service is time sensitive, providing for a confirmatory email or telephone contact to confirm receipt may be a useful tool.

You might also consider requiring the other party to appoint an agent to accept service, particularly where there is an international element.

Points to note

The best method of notice service for your contract will depend on what is reliable for the parties involved. Think through the practicalities and try to avoid something that will be impossible to carry out or not work effectively over the life of the contract.

Compliance with mandatory notice clauses is important, but add a layer of common sense. If you know that an office is likely to be largely empty, contacting the recipient to advise them of service and providing a copy will help to avoid problems down the line.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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