Thursday, July 12, 2012


In contracts, notices may be used as either a pre-condition to establishing a right or a condition required prior to exercising a right. For example, providing a notice of a claim for an extension of time may require that the other party be provided with a notice of such a claim within a reasonable period. That’s a pre-condition to establishing the right. Before you can terminate an agreement for cause, you are normally required to provide the other party with a cure notice and failure to cure within the time frame allowed, provides you to the right issue a termination notice. Notices may also be a right of their own.

There are three basic elements in establishing a contract notice requirement.
1. How the notice must be provided.
2. The means by which it must be delivered
3. When it is provided or effective.

How the notice must be provided will normally include that it must be in writing. If you are dealing with companies in another country it may require the language the notice must be written in. It will also spell out the authorized parties that may provide or receive notices so that notices are sent to someone who will know what they need to do when they issue or receive a notice. The means by which it must be delivered usually required delivery by a reliable means that provides proof of delivery. For example it could be by certified or registered mail, by a private carrier that provides receipt of delivery. It may also allow for delivery by fax with the proof that all pages of the fax were delivered. The when portion of a notice is used to determine when the notice was effective and most notices require actions within a specific time period after receipt. It may be on receipt as would be substantiated by the documents that confirm the delivery.

In addition there may also be language that addresses problems with the delivery. As companies may have changed their address without notifying the other party or the party being notified could refuse to accept delivery, a notice provision may also address those issues from the perspective that notice would be deemed to have been provided when delivery has been attempted at the last agreed address unless you were notified of a change of address.

Notices aren’t only used to establish or exercise a right. You can include notice requirements with less stringent requirements for use in managing performance. For example, if a supplier makes a change to the process they use to manufacture a product or perform a service that can impact your quality. If you were unable to get a supplier to agree to get your approval prior to changing their process, the next best alternative would be to require the supplier to provide you with notice of the change in advance of making it. You might also require notices for things like: site location change (quality); Tooling change/addition/removal (quality); process flow change (quality); design changes (application); packaging change (risk of damage in transit), Test/inspection change (quality); material source change (quality and supply chain risk); Process chemical change (quality); price changes (sourcing), Lead-time changes
(planing and sourcing), end of life (inventory management), End of service (contingency planning).