01/07/2013

Commercial contracts normally contain clauses about giving notices to the other parties to the contract. Generally, these clauses provide for documents to be sent (or “served”, as lawyers like to call it) by:
•    delivery in person
•    prepaid post, that is, by a letter with a postage stamp on it
•    facsimile (not recommended).

If you have such a clause in a contract and you want to, say, send a formal notice increasing your charges or to tell the other party they are in breach and you want to terminate the agreement, you may be left with some egg on your face if you send that notice by email when the contract doesn’t permit it.

If the notice is disputed on those grounds, you may then require a messy (and expensive) court case to decide if your notice was valid or binding on the other party.

Of course, the world has moved on and facsimile and email usage is common and used routinely. Clauses covering sending documents now often allow for them to be sent by fax and email.  These provisions abound with issues. When is the notice received ie date and maybe even time? How will you prove it? What if the other side says they sent you something but you’ve got no record of receipt?

An example of the practical problems which can occur was Bauen Constructions v Sky General Services. The court had to decide when an email was received in connection with an adjudication under certain legislation. The email response was sent on 21 June 2012 but the receiving party was unaware that it had received the email, because it was caught in its spam filter. It was not discovered there until 12 September 2012. The question was whether the email had been “lodged”.

Under the Electronic Transactions Act, an email was received or lodged when it was “capable” of being retrieved by the receiver, not when the receiver had opened it or read it. In this case, the court held that the email was received on 21 June 2012.  Similar problems could arise if the receiver has “out of office” on or has left the receiver organization.

All of which leads us back to the humble stamp. Many problems disappear if you use pre-paid post and, even more so, if you use express post or, even better, registered post.

For very important matters, and where time and geography permit, it may even be prudent to have them served personally and obtain a statutory declaration confirming service of the letter at a specific date and time.

So, it may be a case of back to the good old days!

If you need help with deciding how to communicate in formal or important matters which are likely to have legal consequences, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.