What Is a Notice Provision?
A notice provision is an agreement between parties on how to receive notices about contractual matters and how it should be very clear on its requirements.3 min read
2. Assignments or Amendments
3. Contract Defaults
4. Auto Acceptance or Rejection
5. Term Renewals
6. Contract Termination
A notice provision is an agreement between parties on how to receive notices about contractual matters, and this clause should be very clear on its requirements. Typically, it will include the following information:
- How the notice should look
- Acceptable methods for sending notices, such as by email, fax, or mail
- The information a notice should contain
- Who to send notices to
- The time limit for sending notices
Contractors should adhere to all requirements in a notice clause. Otherwise, they may forfeit their rights to make a claim.
About Notice Provisions
Notice provisions are very often treated as an afterthought, but they should be reviewed periodically. The purpose of a notice provision is to cut down on the number of potential disputes by clearly defining what a legally binding notice is.
They're useful because they allow a party that employs another more time to react to problems, such as delays. The employer must have sufficient time between knowing about the problem and coming up with a solution. These provisions also help the employee since he or she clearly knows what to do in the event a problem arises.
In notice clauses, look out for practicalities as well as the important points of how to give notice and make claims. Proper notice can be very important for the following situations.
Assignments or Amendments
Look at the end of a contract, and you'll likely find some miscellaneous provisions that include sections on how parties can assign the contract to a third party or amend the contract. These provisions frequently require that one or both parties give written consent.
A notice provision states how these written consents are properly conveyed. Because amendments or assignments are such significant matters, it's in both parties' best interests to avoid any confusion in these areas.
Notice is very important when it comes to matters of addressing breach and default. One of the most common ways of handling a default is to provide a cure period. The non-breaching party will deliver a detailed, written document to the breaching party, notifying it of its default.
If the breaching party doesn't cure, or fix, the default in the period of time agreed upon in the contract, the non-breaching party can terminate the agreement. This is why it's so important to have clear, unambiguous notice provisions.
Auto Acceptance or Rejection
In some cases, a contract states that if an offering party sends an offer notice to the receiving party, the proposal is automatically accepted if the receiving party doesn't send a rejection (or counteroffer) back to the offering party in a set time frame.
The offering party wants to be sure it has validly sent the offering notice, in the event the receiving party doesn't respond. The offering party doesn't want the receiving party to argue that the notice was either nonexistent or improper, which would make the proposal invalid.
Likewise, a receiving party who acknowledges receiving an offer notice wants to make sure its rejection is properly delivered.
Parties usually include conditions for renewing contracts for additional or successive terms. Sometimes, terms renew automatically unless one party sends a termination notice to the other before an agreed-upon date. They may also agree that the contract automatically ends unless one party delivers a valid extension notice by an agreed-upon date.
There may be a number of ways the parties agree to terminate a contract. Most will require that either party notifies the other of the termination in writing. Depending on the agreement, a termination may be delivered at any time or within certain time frames, as outlined in the contract.
In many cases, parties can agree on what it means to deliver a “written” notice. With so many technological advancements, some people may find it perfectly acceptable to send and receive written notices via email or fax. Still others prefer traditional methods of paper and postal mail. This is just one of the points you'll have to carefully consider when drafting a contract. If you need help with all of the terms and provisions in these legally binding documents, you may wish to consult with a contract law professional.
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