There is a part of nearly every contract entitled “Notice.” No one reads it, but everyone should. What is the Notice provision, how does it work and why does it matter?
What is it?
Every contract is its own little city-state. The language creates a set of rules about what each party has to do, by when they have to do it, and how it has to be done. The Notice provision tells you how you have to communicate with a party to a contract. Most contracts have a zillion snippets of text that require you or the other guy to send notice about something. For instance: delivering an invoice, extending the contract, or complaining about quality. That notice is only officially “sent” under the contract if it is sent like the Notice provision says it should be sent.
Why does it matter?
The Notice provision prescribes how you have to communicate with a party officially under the contract. It is important, particularly where there are deadlines and the triggering of clocks.
Why is this necessary?
This is necessary because every notice could be received and ignored. For instance, let’s say you hire a contractor to come and install new flooring. The contract likely says that he’ll come fix mistakes if you let him know about them. I’ve had floors built, installed, repaired, refinished and restained – some of the flooring guys are not the most reliable business people in the world. So, it is awfully possible that you could call the flooring guys on the phone – and they could say they never got the message. Or, you could send them a letter by registered mail but they could claim you didn’t send it soon enough.
A Notice provision fixes that. First, it ought to tell you how you send your complaint to the flooring guy. Second, it ought to tell you when the notice was received by the flooring guy whether he says he got it or not.
The Notice provision tells you how to communicate under the contract. Every time you deal with the other party under a contract, you are communicating under the contract. So, if your contract says your communication is delivered only 3 days after you send it by certified mail, then technically sending a bill by email is not effective. Now, in application, the way the parties actually communicate can sometimes be seen to override the language in the contract, but not always. Or, if your contract says that you can send a document by facsimile with an electronic receipt confirmation and you call them on the phone to tell them their product sucks, you haven’t actually told them anything.
- When you are negotiating the contract, read the Notice provision and make sure it provides for methods of communication that match how you actually communicate.
- If you no longer use facsimile (and who does), get your lawyer to strike it and replace it with something else. If you can send something by email with a return receipt from the recipient, then make sure your operations actually include making sure you got the return receipt.
- Did I mention you should make sure that your communication methods match the language in the signed contract?
- If trouble brews, read and re-read the Notice provision so you can follow it to the letter. If you are allowed to send something by overnight delivery, don’t send something by regular snail mail.
My form: This is my standard Notice provision
(read & then see notes below)
NOTICES. Unless otherwise specified herein, all notices, requests or other communications under or in connection with this Agreement to or upon the Parties shall be made to such addresses and to the persons designated on the signature page to this Agreement, or such other people and addresses as provided in writing by either of the Parties from time to time, and will be deemed to have been given hereunder as follows: (a) if delivered by overnight commercial delivery service, upon receipt as evidenced by the records of such service; (b) if sent by certified or registered mail, seven (7) Business Days after posting it; and (c) if sent by email, the receiving Party confirms its receipt by reply or other written communication acknowledging receipt.
Notes to this notice provision
- The addresses where things are sent are in the signature blocks. I don’t want to type them twice. Sometimes, a notice provision will say that all notices have to be sent to more than one person – like a party and that party’s lawyer. If that is the case, I use a different framework. That’s pretty rare.
- Notices have to be in writing.
- For delivery, I limit how things can be sent.
- You can send by Fedex or other delivery.
- You can send by certified or registered mail. It’s considered mailed 7 days after deposit. I probably don’t need 7 days.
- You can send by email, but you have to get some acknowledgement from the recipient. This is controversial. The very great Ken Adams has advocated for using RRPost to send emails. I may adopt that, but so far, I haven’t. Principally, because I don’t think that people are really on a routine basis going to use a special email delivery service to communicate under the contract. I also don’t trust people’s management of email inboxes. So, if you want to send something under the contract, you have to stick it in the Fedex or get a receipt from the recipient. Getting confirmation of receipt is a good practice whether you’re talking about a purchase order or a birthday present. So, win, win.