How to avoid the pitfalls of serving notice by email

As businesses in today’s market are effectively reliant on e-communication to perform their usual commercial functions, they increasingly expect email to be the primary method of communication under their commercial agreements. This includes, for example, the service by email of notices and other contractual communications in connection with such commercial agreements.

Whilst service by fax is, for obvious reasons, becoming more and more obsolete, service by email is often the preferred method of service by our clients.

Service by email does provide certain advantages (commercial agility, for example). However, businesses must also be aware of the pitfalls of relying on service by email.

Recent market examples of the problems arising from service by email

Recent case law in the planning sector has highlighted the evidential issues that can arise when trying to prove that an email has been received by Party A even when Party B can prove that the email was generated in its outbox. In this case, Party B attempted to serve a demand notice on Party A by emailing the demand notice to Party A’s agent.

Party A’s agent subsequently confirmed that it did not receive the email containing the demand notice. Despite Party B taking a screenshot and having an email log showing that the email had been sent to Party A’s agent, the planning inspector’s determination was that it could not be satisfied that the demand notice had been served and therefore was not effective. This resulted in Party B suffering financial loss.

The planning inspector confirmed that despite the screenshot and email log demonstrating that an email may have been generated, it did not prove that the email was actually sent or delivered. Whether the inspector would have taken the same view if Party B had received an email ‘read receipt’ from Party A’s agent is not clear.

Although, this example specifically relates to the service of notices under the rigid and formulaic Community Infrastructure Levy regime, it does serve as a stark reminder for all that service by email can present practical and evidential problems if a dispute escalates.

Pitfalls of service by email

Failing to validly serve notices on third parties or missing notices that are validly served on you can carry significant consequences. Particularly in the context of legal proceedings, if you fail to validly serve a notice then you may find yourself out of time to bring a claim and if you miss a notice that is served on you then you may suddenly be on the back foot in a dispute.

Whilst certain areas of law have prescribed processes for serving notices (for example, notices served in relation to rights in real estate), pitfalls that can arise in the context of commercial contracts include the following:

1. Inconsistency in the terms of the contract (for example, we have seen front-end “boilerplate” clauses that exclude the service of notices by email, but other contract terms refer to the service of notices by email).

2. The contract not expressly stating what email addresses notices are to be sent to.

3. Email addresses being referenced in the contract that are not subsequently monitored by the parties resulting in notices being missed.

4. The contract terms not expressly stating whether notices concerning the commencing of legal proceedings can be served by email.

5. The contract not stating when notices are deemed received if sent by a particular method.

Steps that can be taken to mitigate risk

In summary, it is key that any notice provision sets out a clear mechanism that ensures that any notice will come to the attention of the appropriate person, describes how notices are to be delivered and when notices are deemed to be received.

Putting this into practice, when drafting notice provisions the parties to a contract will need to consider the following:

1. If notices are to be served by email, the contract should expressly state what email addresses such notices are to be sent to. To ensure that notices are not missed, the relevant email address should be one that is continuously monitored.

2. Businesses should also consider that employees may not remain in post during the entire term of the contract and the associated email addresses may become inactive. As such, it may be preferable that the parties create an email account (i.e. [email protected]) specifically for the sending and receiving of notices.

3. Ensure that the contract expressly states when notices are deemed received (e.g. 9am on the business day immediately following the day on which the notice is sent by email). When dealing with cross-border contracts the parties will need to carefully consider what will constitute a “business day” for the purpose of serving notices.

4. To ensure clarity, the contract should expressly state whether the associated notice provision applies to the service of legal proceedings. To avoid complications arising from serving legal proceedings by email, parties often state that the notice provisions in a contract do not apply to serving legal proceedings.

If you have any concerns as to how to correctly serve a notice on your counterparty or you require advice in order to effectively draft notice provisions in a contract then we can help. Please do get in touch with our experts for advice on commercial agreements, contracts and disputes.