The Last Word

On Notice

The notice provisions of contracts are crucial to our clients’ declarations of default, contract terminations, contract renewals, and other exercises of rights. Giving notice improperly can result in clients losing benefits and their lawyers being sued for malpractice. In contract notice provisions, drafters must satisfy two distinct goals. First, the specified method of giving notice must be clear and simple for the clients to implement when giving notice. Second, this method must assure that notices received by the clients are given in a way that provides actual knowledge of what the other party is communicating. Satisfying both goals requires drafters to pause and consider what their clients actually need in each situation.

Always Require Notices in Writing

At a minimum, notice provisions must require that all notices, particularly important notices like exercises of rights or default demands, be written. For all important matters, oral notice is bad for both parties. For example, the sender of an oral notice may have trouble proving that it provided an oral notice to the other party, and the recipient may be lulled into disregarding an oral statement or demand, dismissing it as just conversation. The fact that an express writing requirement is generally necessary to overcome each party’s right to communicate its notice orally drives home the importance of requiring written notice in all contracts. See, e.g., Atwood v. Southeast Bedding Co., 485 S.E.2d 217 (Ga. Ct. App. 1997) (analyzing notice under UCC § 2-607).

What Is Written Notice and How Must It Be Given?

The sender needs to be able to prove to a court that the sender gave notice. The best way to give provable notice is to send a hard copy of the notice by USPS registered or certified mail or national overnight delivery service, with delivery receipt requested. Registered mail is more secure but slower and more difficult for mailrooms to deal with; consequently, certified mail is the USPS service generally used for legal notices. See Certified vs Registered Mail – Difference b/w Certified and Registered Mail, USPS Info. There are problems with both certified mail and overnight services. Snail mail is notoriously slow and becoming slower by the year, and, although overnight delivery services are faster, they cannot make deliveries to P.O. box addresses. For these reasons, it’s best to provide for notice to be sent by either of these alternatives so that, if the recipient has provided only a P.O. box address, notice can still be given.

What about personal delivery? Most contracts permit personal delivery of the written notice, but if the recipient is a national company, personal delivery to a receptionist at a remote location is probably not feasible for the sender or desirable for the recipient.

What about email notices or their outdated cousin fax notices? Lawyers should be wary of email (and fax) notices for both senders and recipients. These avenues of communication are a great way to initiate the discussion on a matter that the sender wishes to work out with the recipient. But as an actual notice that may trigger enforcement or property rights, these methods are perilous because the sender may have proof issues, and the recipient may not understand the notice’s gravity. Consequently, most drafters require that email and fax notices be followed up by hard-copy notices sent by certified mail or overnight delivery.

On What Day Is Notice Considered Given?

Whether a notice is considered to have been given when sent or when received is crucial to both the sender and the recipient—cure periods are triggered by this date, and notices of renewal, termination, and the like must be given on time to be effective. The sender wants the notice to be deemed given when sent, and the recipient does not want the notice to be considered given until received, so compromise is necessary. This compromise generally takes the form of a stipulation that notice is deemed given a certain number of days after it was sent. If the recipient insists on actual receipt, then the sender should include a stipulation that if a notice is returned as undeliverable, then it’s deemed given on the date of attempted delivery.

The Importance of the Notice Address

All contracts should designate the parties’ initial addresses for notice, often with a copy to the parties’ counsel. They should also provide that each party has the right to change its address by notice to the other party (written of course), given a fixed number of days before the notice is to become effective.

Conclusion

Although it’s OK to have a standard notice provision as a template, we should think through the practicalities of giving and receiving notice in each contract situation to assure that the sender (and its lawyer) has a practical way of giving notice and the recipient gives each notice the attention it requires. n

The Last Word Editor: Marie Antoinette Moore, Sher Garner Cahill Richter Klein & Hilbert, L.L.C., 909 Poydras Street, Suite 2800, New Orleans, LA 70112, (504) 2992100.

Published in Probate & Property, Volume 36, No 1 © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.