Australia: Did you notice that clause at the back of the contract?

Clayton Utz Insights
Last Updated: 8 August 2014
Article by Dan Fitts

Key Points:

Strict compliance with a boilerplate notices clause may be required to validly exercise key contractual rights.

The recent case of Greenclose Limited v National Westminster Bank PLC [2014] EWHC 1156 (Ch) considered the effect of a notice purported to be given by one contract party otherwise than in strict compliance with the notices clause in the contract boilerplate provisions.

A bank tries to exercise an option at the last minute

As a condition of National Westminster Bank granting loan facilities of Ł15 million to Greenclose Limited, Greenclose was required to enter into an interest rate collar transaction. The parties selected the 1992 ISDA Master Agreement (Multi Currency-Cross Border Form) to govern the interest rate collar transaction.

The Bank had the option to extend the initial two-year term of the transaction for a further two years, if notice was given to Greenclose prior to 11am on 30 December 2011. By December 2011 the Bank was generating significant profits from its "in the money" position under the transaction, and internally had determined to exercise its right to extend. The managing director of Greenclose (Mr Leach) had been requesting that the Bank not extend the term of the transaction, at least up until 23 December 2011 when he left the office for the Christmas break.

Notwithstanding that the notice to extend could be given any time before 11am on 30 December 2011, the responsible employee at the Bank (Mr Tew) elected not to send a notice until the morning of 30 December. On that morning at 9.35am Mr Tew attempted to send a fax to Greenclose's fax number giving notice of the Bank's decision to exercise its right to extend the collar. The fax transmission failed.

At 9.45am Mr Tew proceeded to email Mr Leach, copying other employees of Greenclose, enclosing a copy of the fax that had previously failed. At 9.58am, Mr Tew then called the Greenclose office telephone number. However, there was no response. A no doubt increasingly anxious Mr Tew then rang Mr Leach's mobile number which went through to voicemail. Mr Tew left a message on the voicemail advising Mr Leach that a failed fax and an email had been sent. Mr Tew also indicated in the voice message the Bank's intention to extend the collar. Ultimately it was held that the voicemail message was not an attempt to give notice, but instead a way to draw Mr Leach's attention to the fax and the email.

Although there was some conjecture around the sequence of events, the Court ultimately agreed with Mr Leach's evidence that he did not see the email or hear the voicemail message left by Mr Tew until after 11am on 30 December 2011.

Issues for consideration: was the contractual right validly exercised?

The key issue for determination was whether the Bank validly exercised its contractual right to extend the term of the interest collar rate transaction by giving notice to Greenclose before 11am on 30 December 2011.

Specifically, the question for the Court was whether the different means of giving notice in the ISDA Master Agreement are mandatory or permissive.

How could notice be served?

Section 12 of the ISDA Master Agreement says:

  • Effectiveness. Any notice or other communication in respect of this Agreement may be given in any manner set forth (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:-
    • if in writing and delivered in person or by courier, on the date it is delivered;
    • if sent by telex, on the date the recipient's answerback is received;
    • if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine);
    • if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested) on the date that mail is delivered or its delivery is attempted; or
    • if sent by electronic messaging system, on the date that electronic message is received...
  • Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it." [emphasis added]

Part 4 of the Schedule to the ISDA Master Agreement did not contain a fax number or email address for the named contact at Greenclose, or for anyone else.

In determining whether section 12(a) is mandatory or permissive, the Court analysed the phrase "may be given in any manner set forth" in section 12(a). Given that "may" is followed by a list of various methods of serving notice, the person serving the notice has a choice between the prescribed listed methods. In the ordinary course the word "may" is most commonly interpreted as being permissive. However, in this case the surrounding context led the court to determine that "may" was mandatory, in sense of "may only". Notice can therefore be given in any manner listed, but not in any other way.

In arriving at this conclusion the Court had regard to, amongst other things, the phrase "notices or other communications are to be given" in section 12(b). That phrase indicated that the details provided in the Schedule to the ISDA Master Agreement mandate the means of notification.

Accordingly notice has to be given by the means prescribed by section 12(a), and in accordance with the details provided in Part 4 of the Schedule to the ISDA Master Agreement (unless an amendment has been made under section 12(b) to update the notice details). For example, if an agreement specifies that facsimile is a permitted mode of notice, but a fax number is not provided, notice by facsimile will be invalid.

Was the email effective notice?

In light of the finding that the methods in section 12(a) are mandatory, the Court had to decide whether the email to Mr Leach constituted effective notice. It found that, regardless of whether "electronic messaging system" as referred to in section 12(a) includes email (most likely it would not), as no email address was provided in the Schedule to the ISDA Master Agreement, notice by email was not permitted.

The Court made the further comment that even if email had been expressly permitted, notice would still not be valid, as the email was not opened or seen by Mr Leach until after the deadline. Actual communication of the subject matter is necessary. There was some dispute as to whether Mr Leach had accessed his voicemail before the deadline, but in any event, as noted earlier, the Court found that the voicemail was not itself intended to be a notice of the extension.

Ultimately, the Court held that it could not accept that at the time of entering into the collar transaction, the parties had agreed that sending an email to someone who is not identified in the notice section of the ISDA Master Agreement Schedule and who would not be expecting notice by email, would suffice as effective notice of the extension of the term of the transaction.

Key message

It is increasingly common for communication to be done by way of email, and increasingly rare for it to be done by way of fax. Nevertheless, boilerplate notices clauses may not have always kept up with the intended or likely means of communication.

If a notices clause is expressed in mandatory terms (which can include the use of the word "may" as in the ISDA Master Agreement), parties need to ensure that the clause reflects how communication will occur, and that they adhere to the requirements of that clause, including by updating contact details where required.

And if there is a deadline for notice to be given, don't wait until an hour beforehand to start trying to send that fax!

You might also be interested in...

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.