Contract notice provisions – make sure you comply!
I’d like to talk about Contract notice provisions. Typically, a notice provision requires one party to notify the other in certain defined circumstances within a certain time frame and in a certain format. Unfortunately, in practice such notice provisions are often overlooked by Contractors or not followed out of fear of upsetting their Client. But this approach is fraught with danger as the Contract will contain a variation clause and it is the obligation of the Contractor to follow the Contract, so in essence the Contractor by issuing a notice is merely operating the provisions of the Contract and not being aggressive. It’s as simple as that.
A notice provision is important as it is the mechanism which enables a Contractor to claim for an EOT and additional costs. So, take my advice and become familiar with the notice provisions contained within your Contract and ensure that they are fully understood and complied with.
Contracts often state that entitlement to claim will be lost if the appropriate notice has not been delivered in due time and may become “Time Barred”. In many countries, such notice provisions are strictly interpreted and enforced, and the Contractor who has not complied with the clause will have lost his entitlement to claim, so it is essential that the Contractor strictly follows the notice requirements, otherwise all will be lost.
Whenever an event occurs send in a notice within the required deadline, even if you are not sure that it has actually caused a delay or additional cost. It’s best to be safe and issue a notice in any event, even if eventually you do not fully pursue the claim. A claim notice should include the following:
• A description of the event itself
• An explanation of what happened
• Details of when it occurred
• Details of where it occurred
• The cause of the event
• An estimate of its’ likely duration
• Its’ potential impact on the project (performance, time and costs).
It’s best at this stage to comprehensively set out all potential impacts of the event whether they have actually materialised or not. A notice that is too narrowly drafted can cause issues later on.
All notices should be issued within the deadline stipulated under the Contract. If there is no time period specified, then the notice should be provided within a reasonable time after the Contractor becomes aware (or should have become aware) of the event giving rise to claim. The principle behind the notice period is to provide the Client with sufficient information, in order to allow him to take the necessary informed decisions and to mitigate the effects of the event as soon as possible. If the notice is provided late, the Client can argue that you took away his opportunity to decide on how best to handle the notified event and your entitlement will be either reduced or negated as a consequence.
Contracts quite often deal with the manner of how to deliver (or “serve”) a notice. For example, a notice may have to be delivered personally, sent by first class post or fax and will be deemed to have been served at the time of personal delivery, or 48 hours after the time of posting or at the time of transmission of the fax, as appropriate. The notice should be signed by someone who has the authority to sign and this person will often be specified in the Contract. If not, it could be argued that the notice has not been provided in the contractually required format and is therefore null and void.
From my experience, even trivial mistakes or anomalies when drafting or serving a notice might allow a Client to raise objections that a notice was not effectively provided by the relevant deadline and leave you with the risk that your claim is time barred. In summary, a little forethought and preparation can save a lot of heartache later on!