Up until the recent decision of the Inner House of the Court of
Session in Hoe International Limited v Anderson & Aykroyd
 CSIH 9 if a contract set out strict conditions on how a
notice should be served, then the approach taken by the court was
quite simple – if any notice served had not complied with any
of the strict conditions of the contract then the notice would be
deemed to be invalid. The decision in HOE International casts
doubt over that.
The Case: HOE International Ltd v Anderson  CSIH 9
The case concerned a claim for breach of warranties under a
share purchase agreement. The agreement in question placed a
requirement on the buyer to give notice to the seller's
representative of any claim under breach of warranty in writing. As
is the case in many contracts the share purchase agreement set out
the clear requirements for any notice served in terms of the
agreement. The two relevant requirements (there were others that
the court deemed not to be relevant here) in this instance were
that any notice should (i) be sent for the attention of
['MH'] at the firm of solicitors and to the postal address
specified in the agreement; and (ii) be delivered personally, sent
by pre-paid first-class post or recorded delivery.
Sometime after completion of the purchase the buyer's
solicitor sent a notice of a warranty claim to the seller's
solicitor. However, it was addressed to "SC" rather than
"MH" and sent by DX.
The Seller's solicitor argued that the notice was invalid as
it had been sent for the attention of the wrong person and by DX
(rather than by pre-paid first class post or recorded delivery). It
had failed to comply with the contractual requirements.
The Judge at first instance agreed with the sellers. Strict and
specific terms for the service of a notice must be complied with or
the notice will be deemed invalid.
However, on appeal the Inner House determined that the strict
notice provisions did not need to be complied with and found the
notice to be valid. The failings of the notice did not prejudice
the recipient of the notice and a common sense approach should be
taken, the court said.
The Inner House established that as the notice was essentially
informative rather than 'executive' (ie to change the
contractual relationship between the parties) that the strict
notice provision did not need to be adhered to. The purpose of the
notice could be achieved without 'undue strictness' in
terms of the requirements. The recipient of the notice would not be
prejudiced by the failings of the notice.
Curiously the Judgement stated that as the notice provisions
clause covered the requirements for all sorts of notices served
under the agreement that it must be interpreted 'flexibly'
and in accordance with 'commercial common sense and having
regard to the purpose of the individual notice in question'.
The judgement, unfortunately, does not go into great detail about
exactly what types of notices can be served without adhering to a
notice provision – though, presumably, a good place to start
would be to determine if the failings of the notice would prejudice
the recipient of it.
Interestingly the judgement determined that delivery by DX could
be considered, in this instance, to be personal delivery because
'a representative of DX system passed the letter to Tods
Murray, the designated recipient'. That seems surprising given
that DX is in effect a mail system where the delivery of the notice
will have been as part of a general mail delivery. How can
certainty as to delivery be shown.
Though this judgement will undoubtedly be seen by many as the
courts taking a common sense approach it does cast doubt and
uncertainty over what notices can now be challenged by a recipient,
if that notice has not been served in accordance with the notice
provisions in the contract.
Since the decisions in Mannai Investment Co Ltd and Ben Cleuch
Estates Ltd parties to a contract had been able to follow a simple
rule when it came to following notice provisions; if the sender of
the notice had failed to follow the exact notice provisions of the
contract then it was said that they had "failed to use the
right key, and accordingly the lock will not turn", that
meaning that the notice would be invalid. The decision in Hoe
International Limited v Anderson & Ackroyd means that we now
have a position in which some notices can be treated as skeleton
It will be interesting to see if this decision is taken to the
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