Getting notices right under the contract can be critical to the success of your project. Pleading ignorance, or hoping things will be sorted out later, can lead to disaster

Laurence Cobb

You may hold the view that the problem with detailed contract documentation is that it simply gets in the way of the project. However, it is difficult to escape the fact that contracts are governed by their terms whether written, oral, imposed by statute, or a cocktail of the three. Perhaps even less enticing are the provisions regarding requirements for serving notices, both in relation to timing and method of delivery. However, ignore such provisions at your peril. They may be a showstopper when it comes to achieving what you believe is your entitlement during, or after, a project.

■ Payment notices Quite rightly, there have been many articles devoted to the need to comply with payment mechanisms, particularly the provision of payless notices both as to time and content. For anyone not familiar with such requirements, some immediate homework should be at the top of your agenda but this article does not seek to address that particular set of detailed notice requirements.

■ Notices relating to service Provisions dealing with notice requirements or methods of service within the contract can be difficult to locate but clearly it makes sense to both check the address and the method of service of documents and to comply with any such provisions, particularly where you are running up against the end of a limitation period.

Regarding claims for extensions of time and loss and expense, these are often made at a point later than required by the notice provisions in a contract

The importance of compliance can be seen in the case Ener-G Holdings Plc vs Hormell [2012] regarding a claim for breach of warranty in a share purchase agreement. The defendant argued that the claimant had issued proceedings out of time. Under the contract the claimant was required to give a notice of claim by the second anniversary of completion, but the claim would lapse unless legal proceedings were then issued and served not later than the expiry of 12 months from the notice of claim.

It was accepted that legal proceedings were deemed served on 31 March 2011. Central to the case was the date of service of the notice of claim which the claimant served in two ways, first by a process server leaving the notice at the defendant’s home, and secondly by recorded delivery on the same date. The date of service would determine whether the legal proceedings were time-barred. It took the Court of Appeal to resolve the issue, eventually finding that the legal proceedings were in fact issued a day late.

■ Extension of time notices There are a number of other areas where, to varying degrees, failure to serve notices can make a vital difference. Regarding claims for extensions of time and loss and expense, these are often made at a point later than required by the notice provisions in a contract. However, where you have a bespoke contract or a heavily amended contract, then take great care regarding whether the provision of a notice of claim is a condition precedent to your ability to bring a claim. In the well-known case of Obrascon Huarte Lain SA vs Her Majesty’s Attorney General for Gibraltar [2014], Mr Justice Akenhead confirmed the view that, under the terms of the FIDIC Yellow Book (Plant and Design Build Contract), clause 20.1 of the contract requiring notice be given of a claim for extension of time and/or additional payment was a condition precedent to any claim succeeding.

Both the mechanism for serving the notice and the timings of serving that notice must be exercised correctly

■ Termination notice Another popular and potentially complex area regarding giving the appropriate notices relates to notice of termination clauses. As well as taking due care regarding the procedure required for termination contractually, these provisions often contain grounds for which prior written warning has to be sent out. Getting it wrong can be expensive, both in relation to any claims that the party who gets it wrong may have but also in terms of claims coming back to them as a result of wrongful termination. Both the mechanism for serving the notice and the timings of serving that notice must be exercised correctly. Not only should one avoid following such processes too quickly but also too slowly.

By way of example, in the case of Tele2 International Card Company SA & Ors vs The Post Office Ltd [2008], the defending party was held to have affirmed the contract and lost its right to terminate as a result of its 11 month delay in seeking to exercise its termination right.

These are just some examples of how understanding and getting notices right under a contract can be critical to the success or failure of the steps that you take. While one embarks on a project in the hope that notices regarding some form of failure will not be required, an attitude of “we’ll sort it eventually” and “it will be alright” is dangerous and, in many contexts, a defence of “sorry, I didn’t notice” can lead to disaster.

Laurence Cobb is a partner in the construction and engineering team at Taylor Wessing