Thu 09 Mar 2023

Top tips for contractual notices

The need to serve notices during construction projects is very much the norm, and indeed a necessity. Take payment – the legislation governing the payment in construction contracts means that a contractor’s entitlement to payment tends to flow from the payment notice issued by an employer. A notice not issued correctly can result in the employer being automatically liable for whatever sum is claimed by the contractor (whether they agree it is due or not!).

It is not just employers that can find themselves in trouble as the result of a defective notice. In most contracts that I see, there will be a requirement of some sort of notice (e.g. an early warning) to be served before the contractor is entitled to, for example, a variation or an extension of time. A failure to comply with such notice requirements can result in contractors being denied their entitlement.

So how do you make sure your notices don’t cause you trouble? Here are my top tips:

  1. Get to know your contract: Make sure you fully understand the requirements of your contract. Particularly consider when notices are required, who they should be sent to (including the correct addresses/e-mails) and from, and any time limits.
  2. Highlight the sum due and how it is calculated: To avoid falling foul of construction legislation, all payment notices must show the “sum considered to be due” and “the basis on which it is calculated”. It is not enough to say “you are due £1,000” – it must be clear how you calculated that figure.
  3. Clarity is key: The court will judge a notice by looking at how it would be read to the “reasonable recipient”. Is the notice clear and unambiguous?
  4. Don’t rely on day-to-day communication: Most contracts require notices to be issued in a particular way (i.e. by post or to a specific email address). Don’t rely on general statements in day-to-day correspondence to act as notices. Notices should be clearly identified and unambiguous.

How can we help?

If you have any questions about your contractual rights/obligations, get in touch with a member of our Construction Law team.

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