The Only Certainty With Notices Is Now Uncertainty: Are Some Notices Now Skeleton-Keys That Will Open Any Lock?

Up until the recent decision of the Inner House of the Court of Session in Hoe International Limited v Anderson & Aykroyd [2017] CSIH 9 if a contract set out strict conditions on how a notice should be served, then the approach taken by the court was quite simple - if any notice served had not complied with any of the strict conditions of the contract then the notice would be deemed to be invalid. The decision in HOE International casts doubt over that.

The Case: HOE International Ltd v Anderson [2017] CSIH 9

The case concerned a claim for breach of warranties under a share purchase agreement. The agreement in question placed a requirement on the buyer to give notice to the seller's representative of any claim under breach of warranty in writing. As is the case in many contracts the share purchase agreement set out the clear requirements for any notice served in terms of the agreement. The two relevant requirements (there were others that the court deemed not to be relevant here) in this instance were that any notice should (i) be sent for the attention of ['MH'] at the firm of solicitors and to the postal address specified in the agreement; and (ii) be delivered personally, sent by pre-paid first-class post or recorded delivery.

Sometime after completion of the purchase the buyer's solicitor sent a notice of a warranty claim to the seller's solicitor. However, it was addressed to "SC" rather than "MH" and sent by DX.

The Seller's solicitor argued that the notice was invalid as it had been sent for the attention of the wrong person and by DX (rather than by pre-paid first class post or recorded delivery). It had failed to comply with the contractual requirements.

The Judge at first instance agreed with the sellers. Strict and specific terms for the service of a notice must be complied with or the notice will be deemed invalid.

However, on appeal the Inner House determined that the strict notice provisions did not need to be complied with and found the notice to be valid. The failings of the notice did not prejudice the recipient of the notice and a common sense approach should be taken, the court said.

The Decision

The Inner House established that as the notice was essentially informative rather than 'executive' (ie to change the contractual relationship between the parties) that the strict notice provision did not need to be adhered to. The purpose of the notice could be achieved without 'undue strictness' in terms of the requirements. The...