This article is written by Kshitij Srivastava, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.

Introduction

A contract is a legal instrument which establishes a legitimate relationship between two or more parties. It defines the objectives, purposes, duties, and the nature of the work to be done among the parties. It lays down the mechanism in which the parties have to function. All of these are mentioned through different clauses written in the agreement or contract. 

The notices clause is also one of many such clauses provided in a contract. In order to inform the parties regarding their duties, obligations, or any other matter in regard to their work within the scope of the contract, this clause is used. 

For example, a provision in a contract states that A is required to supply B with 100 computers within 2 months after the commencement of their contract. Now, after the commencement of that contract B may notify A about the delivery of the products through serving a notice to him under this notices clause. 

This clause assists the parties to bring certain matters to each other’s consideration which affects their contractual norms, directly or indirectly. The notices clause, generally, contains the:

1. The issues and/or matters relating to or affecting the provisions in the contract for which it is necessary to inform the parties through serving a notice; and 
2. The manner of serving such required notice(s).

Therefore, it is very important to have a notice clause in a contract so that the actions of the contracting parties are accountable, legitimate and within the attention of one another.

Importance of notices clause

As mentioned above, it is important to provide a notices clause specifically. It is done to support the actions of the contracting parties taken among themselves. However, it is not necessary. The parties to the contract may or may not agree to draft this clause, but once drafted, it needs to contain the clauses in respect to which it is issued and the manner to issue it. There are certain examples under which notices are generally issued, such as:

1. A formal notice issued for the performance of an obligation by one party, for example, a notice to inform the party about the delivery of goods or services, etc.;
2. A notice in order to inform a party about their rights under the contract;
3. A notice regarding the termination of a person or the contract;
4. A notice regarding the breach of contract and how it is to be ratified or rectified;
5. A notice for providing remedy or indemnification and the manner for the same; etc. 

It is important to note here, that when notices are issued under this notices clause, the actions of the parties are made accountable, therefore, it is necessary to adhere to the terms of this clause. The failure of which may lead to ineffectiveness of such notices issued and which may also lead to the breach of the contract. So, if a notice clause is drafted containing its manner then the parties are bound to follow that manner only. For example, where parties to a contract have agreed to issue a written notice of delivery of goods within 2 hours from commencement of the contract and which is to be replied by the other party within the next 1 hour in the same manner stating the confirmation, then failure of such requirements may form a liability of breach of contract on the party at fault. 

How to efficiently negotiate the notices clause

In order to have a notices clause enforced, it is vital for the parties to mutually establish a proper and fixed method for it. It is so because when this clause comes into effect, the parties are to adhere to its norms and the manner in which it is to be done. The parties cannot divert from the method and cannot serve the notice in any way other than what is provided in the clause. It is also to be noted that under this clause if a party has served a notice to another as per the norms of the provision specified in the contract (by the consideration of both/all parties) then the point of proving whether that notice is received by the other party becomes irrelevant. Hence, it is very important for the parties to negotiate this clause before finalizing the terms of this provision. Otherwise, it will be a slippery slope for either of the parties which in future may declare the contractual obligations and liability void.

How to draft an effective notices clause

To provide for an effective notices clause it is crucial to expressly draft all the provisions under it. This will not only assist the parties to have a convenient method of serving the notices but in retrospect will also reduce any excuses that might arise, while attending to any matter and/or issues. 

The parties have the liberty to set out the rules of this clause as per their own requirements and convenience since there is no one particular method for it. However, there are certain criteria that are generally used while drafting this clause in contracts. They are of the following:

1. The communication of the Notice;
2. The recipient;
3. The address of the recipient; 
4. The period of the Notice;
5. The language.

Hence, a Notices clause may provide for – 

Communication of the notice

The mode of delivery of the communication is the first vital step towards the serving of a notice. It may be delivered – 

1. in PERSON;
2. by POST;
3. by COURIER;
4. by EMAIL.

The recipient and the address

It is important to mention the person concerned with and/or in whose regard this notice is served. Further, the address required to transmit the notice must be correct. The registered office and the home address of the person concerned can be used. 

The period of the notice

It must contain the period when the notice is deemed to be received. For example, a contract may contain that the official notice shall be served within the period of 2 days from the day of announcing a verbal confirmation.

The language

This clause must specify the language to be used for serving the notice as per the convenience of the parties to the contract. Generally, one language is selected, however, it may be bilingual, considering one to be English and the other to be as per the preference of the parties. 

These are the essentials which are common in most of the contracts. There is no fixed methodology in drafting this clause. The objective is to have a specific, unambiguous and expressly written clause through which a proper and formal notice is served to the acknowledged recipient.  

Conclusion

Firstly, to summarize it is important to state that this article focuses on the importance of the notices clause. That it provides for the importance of its negotiation among the parties before finalizing the terms of this clause. Further, it lays down the basic criteria required and utilized, while drafting this clause, in every agreement and/or contract. 

Now, to conclude, it is pertinent to understand and accept that a Notices clause plays a very important role in any contract. It legitimises the communication between the contracting parties creating the accountability of their actions. It also provides a strong support to other provisions of the contract in enforcing them effectively. Where the parties do not provide a notices clause in a contract it becomes highly difficult to implement such other clauses as well. This clause helps in limiting the loopholes and ambiguity in a contract. The parties, through this clause, can, inter alia, remind each other about the work, duties, and obligations that are required to be performed by them. It also helps in reducing the mayhem arising out of miscommunication. 

Henceforth, the parties are advised to ensure that this clause is drafted to establish a formal way of communication among the parties through which they can have a check and balance upon themselves and have a proper and stable functioning of the contractual norms.

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