Is the Notice Clause in a Contract Important?
Notice Clauses in Contracts
Notice provisions are often treated as boilerplate, but a recent Texas Supreme Court decision makes clear that how these clauses are drafted, and followed, can determine whether a party preserves its contractual rights. The Court’s ruling provides long-awaited guidance on how strictly Texas courts will enforce notice requirements.
Texas Supreme Court Adopts the Substantial Compliance Test — In James Construction Group, LLC v. Westlake Chemical Corporation, the Texas Supreme Court held that minor deviations from a contractual notice provision will not automatically bar a claim, so long as those deviations do not undermine the purpose of the notice requirement or prejudice the receiving party. This decision aligns the Supreme Court with several Texas appellate courts that had already applied a substantial compliance standard.
Written Notice Requirements Are Enforced Strictly — While the Court allowed flexibility for minor deviations, it drew a firm line where contracts require written notice. Oral notice cannot satisfy a contractual provision that expressly requires notice in writing, because written notice serves a purpose beyond simply providing actual notice.
Drafting and Compliance Now Matter More Than Ever — Because courts will examine whether deviations impair the purpose of a notice clause or cause prejudice, careful drafting is critical. Contracts should clearly reflect the purpose of each notice requirement, and parties should review notice provisions closely before sending notice to ensure substantial compliance with all specified terms.
For more information, see our blog post Who Cares About the Notice Clause in Contracts? You Should!
Klemchuk PLLC is a leading IP law firm based in Dallas, Texas, focusing on litigation, anti-counterfeiting, trademarks, patents, and business law. Our experienced attorneys assist clients in safeguarding innovation and expanding market share through strategic investments in intellectual property.
This article is provided for informational purposes only and does not constitute legal advice. For guidance on specific legal matters under federal, state, or local laws, please consult with our IP Lawyers.
© 2024 Klemchuk PLLC | Explore our services