- Hi, everyone.
I'm attorney Aiden Durham with 1180 Law Co. in Colorado.
Welcome back to All Up In Yo' Business
where we're gonna talk about one thing
that you should always notice
when you're looking at a contract.
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All right. So this is the third installment
in my little mini series that I've called, Huh?
Because of course that's what I find myself saying often
when I'm reviewing or reading contracts
staring at them going, "Huh?"
"What does this say?
What is this trying to say?"
I had this with one of my clients just this past week.
I was reviewing a contract from some other company
that this client was gonna maybe work for or work with.
And man, I was saying, "Huh?"
a lot while I was reading that contract, 'cause it was bad.
So anyway, welcome to Huh?
where we're gonna talk about notice clauses.
The notice clause is one
of these boiler plate contract clauses
that we typically see kind of towards the end of a contract.
And one that's often kind of ironically it goes unnoticed
but basically a notice clause is a contractual provision
that we usually see in a contract
that dictates how the parties
to the contract can send and receive notice
to the other party regarding some contractual obligations
or something that they have to do under the contract.
So in what instances and how do we send
and receive notice to the other party?
This might seem like a weird thing to put into a contract.
Why do we have to specify notice,
how I notify the other party of something?
Well, because like everything else
with contracts and business and law in general,
things are open to interpretation.
And if we say, "Hey, no, I notified you of this."
And the other party says, "Well, no, no you didn't.
I didn't get the notification or no, you didn't."
We don't wanna have to fight about notice
or whether something was sent or received properly.
And so we put these provisions
in the contracts to avoid those kinds of issues
of well, was this notice properly given?
And basically when we abide
by the steps in this notice provision, we can rely
and know that when we're giving notice under the terms
of this provision, it will be considered notice
and it will be effective and valid under the contract.
These notice clauses are always going to
look a little different.
They're not written the same in every contract
and we don't always see them in a contract.
It's pretty common to see some kind
of notice clause in a contract
but it's not always going to be there.
The most important instances or kind of transactions where
we really wanna make sure there's a notice provision
or some clause addressing notice in the contract.
Typically, if there are some contractual obligations
that have to be performed by a specific time,
we might put a notice provision in there because of that.
Sometimes the performance of contractual obligations
might be contingent upon receiving some kind of notice
from the other party or maybe even from a third party.
So if one of our obligations is contingent
or dependent upon receiving notice,
then certainly we wanna know, what does notice mean?
Or if there's something
in the contract that requires some kind
of reporting to the other party
maybe about like the progress of the performance
whatever it is we're doing under the contract.
If it's a situation where that might arise
then that's another instance where having a notice
provision is gonna be pretty important.
So like I said, they come in different shapes and sizes.
Here's what a kind of basic notice clause
might read like or might look like.
I'm gonna read it straight from my computer
because I don't have these things memorized
obviously you guys, so a very basic notice provision
might say, each party shall deliver notices, requests,
consents, claims, demands, waivers, and other communications
under this agreement, each a notice.
So we are defining the term notice here.
That's an important thing in writing and address
to the other party at the addresses set
forth on the first page of this agreement or
to such other address that the receiving party
might designate each party should deliver all notices
by personal delivery, nationally recognized
overnight courier with all fees prepaid
facsimile or email, that's a fax
for those of you are younger than me.
Fax is a thing we sometimes still use or email
with confirmation transmission certified or registered mail
with return receipt requested, postage prepaid
except as otherwise provided notice is effective only
upon receipt by the receiving party.
And if the party giving notice has complied
with the requirements of this section.
So there we have a pretty basic clause saying what
is notice actually, and when is notice going to
be considered received and effective only if we send it
by hand delivery, overnight email, fax, or email
and at what date after that is the notice effective.
So that's a simple version
but they can get a bit more complex
or a little bit more complicated.
Here's a more detailed example of a notice provision.
Each party shall deliver all notices
in writing and address to the other party
at the address below, delivery by personal delivery
nationally recognized overnight courier, certified
or registered mail, a facsimile or email.
And then we actually set out the addresses of the parties.
Maybe we ask that they send a copy to the legal counsel
for the other party, if they're sending notice.
And sometimes it can go
into great detail of if it's sent by overnight courier
then receipt is the day that it's received.
Or if it's sent by email
then it's considered received within three days.
All of these things can be kind of tailored depending
on the situation.
But the important thing is that we are aware,
we notice what this notice clause is saying
because that's gonna tell us how we notify the other party
and how the other party notifies us of really anything.
For common businesses
and common instances of where this is really important,
most often in my experience
we wanna pay attention to notice when it comes
to term and termination of the contract as well.
So the term clause in a contract is basically
how long is this contract going to last.
Something that is kind of common in a contract term is
that it will say this contract will have a term of one year.
So our contractual obligations will be good for one year.
This contract will automatically renew for one year terms
unless a party terminates with 30 days notice.
So basically this contract has a year long term
but it'll automatically renew for another year
unless one party notifies the other of their intent to not
renew upon with at least 30 days
before the renewal of the contract.
And so if our notice clause says that notice has to be sent
by certified or registered mail, if there's not that email
or fax section in there, then we can't just send an email
to the other party saying,
"Hey, I don't wanna renew, let's terminate."
We have to follow that notice provision and provide
notice how it dictates and follow that.
Otherwise it doesn't count.
And same thing with termination clauses.
This is kind of important.
Maybe if you're in a subscription, maybe, you know,
subscription services are all the rage these days,
everyone's got a subscription box
or subscription this, a subscription that,
and typically the terms and conditions are the contract
concerning these subscriptions will say, you know,
this automatically renews every 30 days
but if you want to cancel or terminate
you have to give 30 days written notice to terminate.
Otherwise it keeps renewing.
And again, that's where we wanna know,
what does notice mean?
Does that mean I can just text somebody
at this other company and say, "Hey, cancel my account."
Usually not. At a minimum notice
almost always has to be in writing.
So you can't just, you know, whisper,
"I am gonna terminate this contract"
or you can't call the other party
and give them notice that way.
Typically it has to at least be in writing.
So the overall takeaway from this, I mean,
number one that notice clauses come
in a lot of different forms. They're not always standard.
They're not always exactly the same
but they are super important
and they can have an important bearing
on how the process of carrying out this contract goes.
And if one party has certain obligations that they
have to notify the other party of, or if we wanna get
out of this eventually we have to know how to
notify the other party of that.
So even though this is one
of those boiler plate provisions that we see
in every contract practically
that doesn't mean it's something to be ignored
or something that isn't important
and won't really have an impact.
It is important. And you should always notice
and pay attention to the notice clause in your contracts
or if contracts are being given
to you to sign or to review.
That's all for this episode folks,
if you learned a thing or two
go ahead and gimme a thumbs up.
And of course don't forget to subscribe
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So you get notified when I post a new video,
check the description for links
to additional information and resources
including a link to check out the CEO Legal Loft
if you need some well drafted lawyer drafted
and lawyer approved contracts for your business.
If you wanna keep this contract party going
and who wouldn't, I've got another video
in my Huh series talking
about choice of law clauses, which are also
a very important clause that should not go unnoticed.
But anyway, you can check that out here
and I will meet you over there.
Thanks for watching.
I'm Aiden Durham and I'll see you next time.