Read Your Concert Program Booklet and Your Boilerplate Notice Provisions
Concertgoers typically receive a program as they enter the concert hall. Frequently, orchestras include several concerts in a single printed program, so the programs are small booklets, rather than just a couple of sheets of folded paper.
These booklets contain the music program, information about guest performers, an orchestra roster, music notes about the compositions being performed. They also may contain names of orchestra board members, announcements for future concerts, solicitations for donations, lists of past donors, and advertisements targeted toward concertgoers.
After a quick glance at the evening’s program, it can be easy to ignore the rest of the booklet as unimportant or routine. Sometimes that is the case. Yet, I have found useful information in those booklets–places to buy violin strings, upcoming concerts, biographical information about a composer, and nearby restaurant information all may lurk in those frequently unread booklet pages.
Boilerplate in contracts is like those concert program booklets. Contracting parties may view them as repetitive and unimportant. Like the booklet pages, “boilerplate” contract clauses may remain unread.
Yet, contracting parties who ignore “boilerplate,” do so at their peril. Important contract provisions can be buried in what appears to be boilerplate. Plus, most boilerplate clauses are in contracts because the concepts they describe are important. Contracting parties should examine those clauses to be sure that they meet the needs of the specific transaction.
This article is one of several discussing contract “boilerplate” provisions and why those provisions are important. In this article, we will explore “notice provisions.”
Notice Clauses
The notice clause in a contract describes A typical notice provision in a contract my look something like the following:
Any notice required or permitted under this Agreement shall be in writing, and shall be delivered (a) via US certified or registered mail, return receipt requested, (b) personally, (c) via FedEx or other similar carrier, or (d) via fax or email, provided that delivery also is made the next business day via method (c), to the parties at the following addresses:
If to the Seller:
Sally Seller, Inc. , 1234 Sell-the-Farm Road, Richland, Washington 99352, Fax: 999-123-4567, Email: Owner@sallyseller.com
With a copy to:
Artie Attorney, Normandy & Duke, LLC, 1066 Conqueror Lane, Hastings, Nebraska 68901 Fax: 111-987-6543, Email: Artie@normandyduke.com
If to Buyer:
Bullish Buyer, LLC, 9999 Rodeo Drive, El Toro, California 92630 Fax: 222-345-6789, Email: Bronco@bullishbuyer.com
With a copy to:
Elizabeth A. Whitman, Whitman Legal Solutions, LLC, 1201 Seven Locks Road, Suite 360, Potomac, Maryland 20854, Fax: 301-530-6313, Email: info@whitmanlegalsolutions.com
or to such other address or addresses as the parties may from time to time specify in writing. Notices delivered by US mail shall be deemed delivered three days after deposit in the US mail. Notice shall be provided by FedEx or other carrier and shall be deemed effective upon actual delivery to the recipient’s location. If notice is sent in any manner other than as provided by this section, notice shall be deemed received when sent.
A notice provision can be evaluated on its providing the five W’s and an H of good writing–Who, What, When, Where, Why, and How. This clause describes to whom, where, and how notice is to be given.
Other provisions scattered throughout a contract may describe when and why notice is required. Examples of provisions that tell why and when notice must be given include:
Seller may, by providing Buyer with notice no less than three business days prior to the initial Closing Date, extend the Closing Date by 15 days.
Unless Buyer provides Seller with written notice of termination of the contract on or before the Due Diligence Deadline, Buyer’s Deposit shall be nonrefundable.
If a party to the contract fails to cure a default within 15 days after written notice from the other party, then such default shall become an Event of Default.
Once a party is aware of the location of the notice provisions in a contract, the party should make sure that the who, what, when, where, why, and how of giving notice work as the parties intended.
WHO Gets Notice and HOW and WHERE is Notice Sent
The “who” of giving notice is not complicated, but some parties still make fatal errors with it. Best practices for a notices clause are for the notice to go to at least two different individuals, preferably at two different locations. Usually, this is accomplished by having the notice go both to the party and to its attorney.
The “where” of giving notice is equally straightforward. Notice is to be given at the street or email address or via the fax number in the notice clause. Parties should be sure that the addresses and fax numbers in the contract are ones that will be checked regularly throughout the contract process, lest a notice be overlooked.
The “how” of giving notice requires more consideration. The example follows a common current approach and allows notice by hand delivery, certified or registered mail, overnight delivery (e.g., FedEx), email, or fax. However, notices delivered electronically by email or fax must be followed by a hard copy.
Although this approach is common, I believe it is outdated. Offices have moved away from fax machines in favor of email. Many supposed fax numbers actually are electronic fax accounts that feed into the recipient’s email. Knowing this, I have begun omitting fax delivery of notices in contracts I prepare.
Likewise, it has been more than a decade since I sent a contract notice via US mail when I had another choice. Certified and registered mail take several days to deliver. In fast-paced, sophisticated transactions, parties rarely want to wait three days for a notice to be effective. This is especially so when for a few more dollars, the notice can be sent via FedEx or a similar carrier and be effective the next day. Therefore, I have been omitting registered and certified mail delivery from real estate acquisition and other contracts I expect to operate in a tight time frame.
Whether hand delivery makes sense will depend upon the transaction. When parties are all in the same geographic area, hand delivery via courier remains a viable option. However, if the parties and their attorneys are in numerous cities across the country, both email and overnight delivery services provide notice at a similar speed at a comparable or lower cost.
Additionally, as technology evolves, parties should consider additional “hows” of giving notice. For example, parties might want to give notice by text or social media. Might a message on Facebook Messenger[1], WhatsApp[2] or WeChat[3] or a snap via Snapchat[4] be acceptable for some situations?
Like most clauses in contracts, the who, where, and how of delivery will depend upon the parties. Some parties may not be comfortable eliminating the traditional hand delivery and US mail options. A party might travel so frequently that electronic delivery is the only reliable way to reach them. Yet, another party not have or regularly check email, which would make that method impractical.
WHAT Notice is Permitted
Notice clauses in contracts implicitly focus on written notice. However, other places in a contract, verbal or oral notice might be allowed. Unless the contract specifies that written notice is required, oral notice generally is permissible.
When reviewing a contract, the parties should consider when oral notice is appropriate. Although oral notice might make sense when one party is informing the other that a surveyor will be going to a real estate site, most parties will want less routine matters, such as contract termination and exercise of options in a contract, to be in writing.
Further, since the notice clause might not address oral notice, if parties plan to accept oral notice, they should also include language stating who receives the oral notice. Oral notices usually apply to less formal situations and might be most appropriately be given to only one party. In other instances, an oral notice, such as notice of touring of real estate during due diligence, might be most appropriately given to the on-site property manager.
For oral notice, most parties would agree that a phone call suffices. However, they need to consider whether a voicemail message provides notice. Plus, with texts becoming so popular, will a text suffice? If so, does the party need to acknowledge receipt of the text? Again, it is for the parties to determine what meets their needs and the needs of the transaction.
WHEN Notices are Required and WHEN Notice is Effective
Parties usually must look outside of a notice clause to determine when notices are required. In a typical 20-page contract, the word “notice” might appear a dozen or more times in sections other than the notice section of the contract. Each of those provisions likely tells the parties when notice is required.
Parties should not leave the notice requirement to chance. There are times when advance notice is important to prevent disruption of a business, such as when inspectors will be conducting on-site due diligence. On the other hand, requiring two weeks’ notice of that inspection requiring buyer to give notice to the seller of every stage of its due diligence and loan application process would slow progress on contract performance.
The parties should review the entire contract to be sure that it requires notice when (and only when) notice makes sense. Likewise, parties should assure that the number of days’ notice matches the needs of the situation.
The sample notice clause includes customary provisions regarding when notices are effective:
Three days after deposit in the US mail for registered or certified mail
The business day after deposit with an overnight delivery service
When sent by fax or email (but only if followed by overnight delivery)
Upon receipt for hand delivery
For registered and certified mail that is tracked by the US Postal service and the actual delivery date can be determined, I question the reasoning behind the three-day provision. On one hand, the three-day provision provides the sender with certainty regarding the notice date and disincentivizes the recipient from dodging or refusing delivery.[5] However, that provision also makes notice effective even if the recipient does not receive the notice by the third day.
This dilemma further supports eliminating US mail delivery from contact notice provisions. If US mail delivery remains an option, the parties need to consider how best to meet each party’s needs without incentivizing undesired behavior.
It also is common to condition same-day effectiveness of email or fax delivery upon next-business-day delivery of a hard copy. Since emails, in particular, do get lost or overlooked, the hard copy follow-up notice may make sense, and they do disincentive parties from falsely claiming nonreceipt of emails.
WHY Notice Provisions are Important
Not only should notice provisions be tailored to the parties’ and situation’s needs, but parties must carefully review and comply with notice requirements when performing under a contract. Not uncommonly, parties do not read their contract notice requirements to their detriment. A notice sent only to the wrong people or incorrect address or in a different manner than is in the contract likely will be ineffective.
By reading a recent concert booklet, I learned valuable information about upcoming ticket availability for an in-demand concert I hope to attend. Without that information, I might have been disappointed and been unable to obtain tickets. Likewise, by reading and complying with what appears to be boilerplate, parties’ can avoid disappointment and additional liability in their contract performance.
© 2018 by Elizabeth A. Whitman
DISCLAIMER: The content of this blog is for informational purposes only and does not provide legal advice to any person. No one should take any action regarding the information contained in this blog without first seeking the advice of an attorney. Neither reading this blog nor communication with Whitman Legal Solutions, LLC or Elizabeth A. Whitman creates an attorney-client relationship. No attorney-client relationship will exist with Whitman Legal Solutions, LLC or any attorney affiliated with it unless and until a written contract is signed by all parties and any conditions in such contract are fully satisfied.
[1] Facebook Messenger allows private communications between two or among a group of Facebook members.
[2] WhatsApp is an app originally popular among individuals who had limited texting or international voice services, but it has expanded to include document sharing features.
[3] WeChat, owned by Tencent, Asia’s second most valuable company, is the most popular social media platform in China and has gained popularity world-wide. The website What is WeChat provides more information about this platform and its history.
[4] In Snapchat the posts or “snaps” disappear once they are viewed. Because of the sense that snaps are not permanent, they have a certain appeal for teens and some Millennials. For the uninitiated, Hootsuite’s blog provides a good primer on how Snapchat works.
[5] See my blog Cobras, Mortgages, and Violas: What are Your Contracts and Policies Incentivizing? about the importance of considering what behavior contract provisions incentivize.