The interpretation of commercial contract terms (including commercial leases) by the courts has long been a topic of interest with several notable reported cases in recent years (see our previous article here).
The topic was recently revisited by the Inner House of the Court of Session where the validity of a notice was challenged. The decision serves as a reminder to commercial landlords, tenants and all businesses that legal advice should always be sought in advance where leases or any other commercial contract require notices to be served.
The point before the court was whether the email sent by an agent of the pursuers (the party relying on the notice) to an employee of the defenders and attaching a statement of account could constitute a “written notice” requiring payment in terms of the contract entered into by the parties.
In deciding the point, the court gave regard to the guidance offered in the earlier case of Hoe International Ltd v Anderson. The validity of the notice hinged on:
(1) whether the terms of the notice were sufficient to convey the necessary information to the recipient; and
(2) whether the notice had been issued in accordance with the contractual procedure.
With regard to the first question, the court considered that it was an essential feature of the notice that it had to communicate, essentially, that it was a “trigger” giving rise to a specific outcome in the event of a failure to comply with the notice. However, there was no strict obligation to use the word “notice” or any other particular wording (although doing so would be advisable in many instances).
In this instance, the email in question simply referred to enclosing a “statement of account” for the recipient to “see”. The Court held that did not meet the criteria set out above and thus did not constitute a notice.
With regard to the latter question, whether strict compliance with the contractual procedure is required was (following Hoe International Ltd v Anderson) subject to the particular factual context, including, the severity of the implications of non-compliance with the notice.
In this instance, the Court held that it was only essential that the notice was in writing and received by the other party. A clause prescribing the modes of service of the notice was held not to be mandatory.
The decision serves as yet another reminder to commercial landlords, tenants and all businesses entering into leases and commercial contracts that legal advice should always be sought at the earliest opportunity when serving or receiving notices.
For further information or if you
require assistance with any of the topics raised in this article, please
contact our Commercial Dispute Resolution and Litigation team.
