Feb 9, 2015

Terminating Contracts & Notice Provisions

A recent High Court decision on whether a contract was validly terminated confirmed that express notice provisions in a contract must be strictly adhered to in order for the notice to be effective.

A dispute arose between Ticket2Final (T2F) and Wigan Athletic Football Club (Wigan).  Wigan had made contractual representations that it was within its power and authority to perform its contractual obligations.  This included supplying a certain number of match tickets to T2F.  Wigan's failure to meet this obligation was held by the court to be a breach of that representation.

Under the terms of the contract Wigan was entitled to terminate if T2F failed to pay any sums due and the sums remained outstanding for seven days following notice. Wigan had purported to terminate the contract by reason of late payments to it by T2F. The contract contained a formal notice clause requiring notices to be given in a prescribed manner.  Wigan failed to comply with the requirements of the formal notice clause when it demanded payment before termination.

Wigan argued that the formal notice clause did not apply to a notice demanding payment before termination.  It also argued that there was an implied term arising from the parties' conduct that formal notices could be given by email.

The judge disagreed with Wigan and held that the formal notice clause did apply to the notice demanding payment before termination. He said that the purpose of having a formal notice clause is to ensure that significant notices, such as those which if not complied with might lead to termination, are served in the prescribed manner so that "the recipient can be in no doubt about their importance."

The case highlights the importance of ensuring that any notice provisions set out in a contract are strictly adhered to and that if the parties so wish, expressly permitting notice be given by way of by email in the contract.

in: Case Law, Companies, Contract, News

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