This precedent has been authored by Ilija Vickovich, Lecturer, Macquarie Law School and updated by Dr. Gordon Hughes, Principal, Davies Collison Cave Law.
Where a contract provides for the performance of contractual obligations by specified times, or where the parties otherwise wish to have the right to require performance upon the giving of notice, the drafting of a standard or customised boilerplate provision to that effect is recommended.
It may also be prudent to insert a notice clause in certain kinds of contract for the purpose of setting out the manner in which the parties are to officially communicate and advise each other of progress in performance and other requirements. Parties may expose themselves to problems if there is doubt as to whether they have advised each other adequately of key requirements.
Purpose of notice clauses in contracts
Notice clauses may be included in contracts to:
• establish an agreed upon and valid mechanism for the giving and serving of notices; or
• determine whether and when notices have been validly delivered.
Provisions dealing with notice should provide for such notice to be “effective upon delivery” in order to minimise the possibility of parties taking unfair advantage of delayed or lost notices. It is also recommended, where notice is to be tightly controlled, that a mechanism be provided that can be verified through independent third parties
. Notice clauses may be prescriptive and require the specified form of notice or merely permissive, to confirm the form of notice is effective but not necessarily the only way notice may be served. Watch for “may be served” and “must be served”.
Definition of notice in drafted clauses
It is also not uncommon for notice clauses to provide a definition of “notice” for certain types of contracts that necessitate considerable communications between the parties involving exchange or service of numerous kinds of events, acts or documents (such as construction contracts).
It may be prudent to include a provision in a notice clause to the effect that a time or day commences at an agreed time, especially where there is a likelihood of key acts and events taking place in times other than usual business hours. For example, where notice is given after normal business hours, if this is relevant to the parties in question, it may be useful to specify the deemed receipt time.
Dispatch and receipt of documents by email
Unless specified in the contract, dispatch and receipt of documents by email is governed by legislation. The Electronic Transactions Act 1999 (Cth) (Act) defines time of dispatch, unless otherwise agreed, as the time an electronic communication leaves an information system: section 14(1). Section 14A defines time of receipt, unless otherwise agreed, as the time an electronic communication becomes capable of being retrieved by the addressee at the addressee's designated electronic address.
The Act also specifies that an electronic communication, unless otherwise agreed, is taken to have been dispatched at the place where the originator has its place of business and is taken to have been received at the place where the addressee has its place of business: section 14B.
Note that there are corresponding state and territory provisions, which may or may not be of similar effect.