MANAGING IMPEDIMENTS TO COMPLIANCE WITH THE REQUIREMENTS OF CONTRCATUAL NOTICE IN THE FACE OF COVID-19 EPIDEMIC.

O. M. Atoyebi, SAN

Writer

CONTRACTUAL NOTICES

In many situations, a business contract requires that the other party be notified of the exercise of legal rights under a contract. That is, be given fair warning in advance. Contractual notice provisions set out the means by which one party can bring to the attention of another party, matters which must be brought to their knowledge under the contract, by giving ‘notice’. Unlike most contractual terms, the notices provision is rarely negotiated, and it is not intended to benefit one party or the other. The purpose is to reduce possible disputes by clearly defining what constitutes legally binding notice.

The “notices clauses” in contracts is a designated method to bring notices issued under them to the attention of the other party or parties. The clause decides a method and means to deliver documents required to be formally served, in strict compliance with the terms of the contract. In other words, where a contract requires that a recipient be made aware of the facts and matters in question, a notices clause defines the way it must be brought to their attention.

More often than not, where parties to a contract agrees to a certain method in the notices clause by which the other party can be served, and such method is adopted, it is inconsequential whether the notice actually comes to the attention of the party or not. However, failure to comply with the terms of the clause may cause some problems, to wit;

Service of the notice being ineffective
Placing the party issuing the notice in repudiatory breach of contract.

TYPES OF CONTRACTUAL NOTICES

Depending on the type of contract, the mode of contractual notices which may need to be sent include:

Formal notice that the performance of an obligation under a contract is required.
Notice requiring a party to remedy a breach of contract within a relatively short period.
Notice of termination of a contract, where the right exists.
Exercising rights under the contract, such as a right to exercise an option.
Make a demand for payment of a debt due under a contract or interest.
A demand for delivery of documents.
Amending or renewing a clause.
Contract defaults.
Accepting or rejecting an offer.
Terminating the contract.

CONTENTS OF A NOTICES CLAUSE

An effective notices clause should require that all notices be made in writing and contemplate all acceptable methods of delivery.

A notices clause may stipulate the following;

The mode of delivery of communications, such as hand delivered, prepaid post, courier, email, facsimile.
The address required to transmit the notice, such as registered office of the party.
The persons to which the notice must be sent.
When the notice is deemed to be received.
The language which must be used in the notice.

IMPEDIMENTS TO COMPLIANCE WITH THE ABOVE REQUIREMENTS CAUSED BY COVID-19

The recent outbreak of the global epidemic has undoubtedly constituted a clog in the wheel of compliance with the requirements of a valid contractual notice and hence, will result to a dispute in the long run.

Physical delivery is without question, impracticable, as many affected countries inclusive of Nigeria have imposed a total lockdown to curb the festinating spread of the virus. Similar fate is visited on other substituted means as they all involve an interpersonal exchange of such notices which is no longer tenable in the face of this present quagmire.

MANAGING THE IMPEDIMENT

It is trite law, that to every general rule there is an attendant exception. Therefore, such unforeseen circumstance will automatically be taken into consideration as an exception to the requirements of contractual notices. Parties may now be compelled to make recourse to other means of effecting service in order to arrest a situation of contractual breach. Such options, though volatile may have to be the email channel, social media platforms, direct SMS and other mediums now known or later to be developed.

The above alternatives cannot be faulted in the eyes of the law, as reliance could be placed on two recent foreign cases highlighting the courts’ approach to notice provisions where a notice has been served, albeit not by the contractual means for doing so.

In Torbey Investments Corporated Pty LTD. V. Ferrara (2017) NSWCA 9, the court held:

“When (as here) receipt and comprehension of a notice is duly acknowledged, it would be unreasonable to argue that the notice is invalid because it was not sent according to the method specified in the contract. In this case, it would be unreasonable to construe a provision for service by certified mail as excluding the giving of notice by equally other expeditious means which do in fact result in the actual receipt of the notice by the other party.”

From the foregoing judicial pronouncement, unless a particular form of notice or method of delivery are explicitly excluded in the contract or otherwise not permitted by law, it is possible to serve a valid notice by a contractually unspecified means as long as it fulfils its purpose and it is given as a contractual notice.

Similarly in the case of Jawaby Property Investment LTD V. The Interiors Group (2016) EWHC 557 (TCC), the court concluded that:

“A contractor’s interim payment application had been validly served by email even though the contract expressly required such applications to be served by hand, fax or post.”

CONCLUSION

The judicial authorities presented above and the peculiarity of the traumatic situation which COVID-19 has plunged the world into, have inarguably necessitated a shift in keeping with the requirements of a valid contractual notice; thus, a valid service can be achieved despite the use of a method or form not contractually specified. However, such alternative methods only take stride if; it is effective in terms of actual communication of a contractual matter and evidently acceptable to the party to whom the notice is sent.