Many commercial agreements contain provisions requiring one party to serve notice on the other (or on a third party) when certain conditions are met, or in order to trigger a specific event, for example by serving notice of an intention to terminate. The same agreements will also typically contain notice clauses detailing where and how notice is to be served in order to be considered valid and effective. Most notice clauses in commercial agreements require that notice is provided in writing to a specified address, or to any other address that is subsequently notified to the other party. While we have been seeing more and more notice clauses that allow notices to be served via email, postal service continues to be a staple of notice clauses.
Of course, the majority of commercial agreements currently in place were drafted at a time when most offices were primarily staffed with people rather than plants, and service of notice on a company’s offices was expected to be effective in bringing the matter to the attention of the relevant people. However, the office exodus caused by the COVID-19 crisis has led to situations where parties are finding themselves having to urgently serve a notice on a counterparty’s offices in order to honour the terms of the agreement, while at the same time they may be aware, or at least reasonably suspect, that the office may be closed, and it may take longer for the notice to reach the relevant person’s attention. How strictly would a notice clause in a contract be interpreted in this situation?
In contracts governed by English law, the normal rules of contractual interpretation apply to the interpretation of notices clauses. The courts apply an objective test to determine the parties’ intentions, which is primarily focused on the language of the clause in accordance with conventional usage, in the context of the background knowledge available to the parties at the time the contract was entered into. The courts will also give appropriate weight to ‘business common sense’ and must balance a common sense reading with a literal reading (see Arnold v Britton  and Wood v Capita Insurance Services ). However, where a contract is sophisticated, complex and prepared with the assistance of legal professionals, an English court will apply the language used in the contract rather than an interpretation based on ‘business common sense’. This has sometimes led to results that might be considered unfair or commercially absurd. This is illustrated in Zayo Group , which concerned the interpretation of a notice clause in a share purchase agreement which required that any claims under the warranties be notified to the defendants within a certain period, the clause requiring delivery of the notice to a specified address. The claimant had attempted delivery but the courier was informed that the recipient no longer lived there, so he did not deliver the notice. In that case, the High Court was of the view that a mere attempt to deliver was not enough to discharge the claimant’s duty to serve the notice, but also noted that, given the way the clause was drafted, service would have been valid even if the building had been demolished and the courier had left the notice on the rubble.
As a result of the pandemic, the UK Government has issued Guidance (which is not legally binding) encouraging parties to commercial agreements to conduct themselves fairly and responsibly during the pandemic wherever there has been a material impact from COVID-19. In particular, the Guidance encourages parties to act in a spirit of co-operation, aiming to achieve practical, just and equitable contractual outcomes having regard to the impact on the other party, and cites the giving of contractual notice as one of the areas where those principles should apply.
It is unclear whether this guidance, or the COVID-19 office exodus, would have any influence on the way English courts interpret contractual notice clauses. In order to ensure that use of an alternative form of service not enshrined in the agreement is not later put into question, the safest avenue would be to duplicate efforts by providing both: (i) physical service in accordance with the letter of the clause, as well as (ii) notification via an alternative method of communication, such as email. That second notification should be used to inform the counterparty of both the fact that service has been effected on their premises as agreed; and to provide a copy of the notice served, for their convenience. Of course, good communication is always key to a healthy commercial relationship, and previously informing the counterparty of your intentions and, if possible, agreeing on where to send that second notice, would go a long way to ensuring the smoothest possible outcome.