In what might seem a surprising decision, the High Court has held that a notification disputing a price adjustment under a completion accounts mechanism did not need to comply with the contractual requirements for notices under the contract.
The case illustrates the need for careful drafting to make it clear how parties should serve different types of notification under a contract, as well as to examine the notice provisions of a contract carefully before notifying another party.
What happened?
Inspired Education Online Ltd v Crombie [2025] EWHC 1236 (Ch) concerned the sale by an individual of the shares in an online education company to a buyer in the same sector.
As is usual, the terms of the sale, including the purchase price, were set out in a share sale and purchase agreement (SPA).
The SPA contained a "completion accounts" schedule. This is a mechanism by which the parties agree to adjust the purchase price upwards or downwards after completion of the sale and purchase by reference to a target or estimate. For more information on completion accounts, see the box "What are completion accounts?" below.
What are completion accounts?
The SPA stated that, once he received the draft completion accounts, the seller was required to:
"within 20 Business Days ... notify the Buyer in writing whether [he] agrees with the [draft completion accounts] ..."
and that:
"if ... the Seller fails to make any written notification within the period of 20 Business Days referred to [above] ... the Completion Accounts ... shall be deemed to have been agreed ... in the form of the [draft completion accounts] ..."
In other words, if the seller did not dispute the draft accounts within 20 business days, he was taken to have approved them.
Separately, the SPA contained a notice clause. This is a common provision in commercial contracts that sets out how the parties are required to deliver notices (and, potentially, other communications) under or relating to the contract. For more information, see the box "How do contractual notices work?" below.
In this case, the notices clause read as follows:
"Any notice given to a party under or in connection with this Agreement (unless otherwise expressly provided for in this Agreement) shall be in writing in English and sent to the Party, by a method set out in clause 27.3, at the address or email address, and for the attention of the contact as set out in the following table"
That table required the seller to send any notices for the buyer to a specific individual.
The buyer prepared draft completion accounts and sent them to the seller.
In due course, and within the contractual time limit, the seller sent an email to the buyer disputing the draft accounts. However, the seller sent that email not to the individual specified in the SPA, but rather to the individual who had sent him the draft accounts.
The buyer claimed that the seller had not notified the buyer in accordance with the notices clause, that the seller's purported email notification was invalid, and that the seller was therefore deemed to have approved the draft completion accounts.
How do contractual notices work?
What did the court say?
The court rejected the buyer's argument.
The judge noted that the notices clause required "any notice" relating to the SPA to be in writing and given in accordance with the notices clause. However, the completion accounts provisions required the seller to "notify the Buyer in writing" and subsequently spoke of a "written notification".
In the judge's view, by using the words "notify" and "notification" in the completion accounts provisions, rather than the word "notice", the parties envisaged something more flexible than a formal notice under the contractual notice provisions. If the contract parties had meant for a completion accounts dispute to fall within the strict contractual notice provisions, they would have used the word "notice" instead.
The court cited other reasons to support this interpretation. For example:
- The completion accounts mechanism referred to "any written notification", suggesting that the parties were happy for any number of methods of notification to be used (and not just the method required by the notices clause).
- The completion accounts mechanism could have referred specifically to the notices clause, but it did not, implying that the parties did not mean for the contractual notice provisions to apply to it.
As a result, the seller had validly contested the draft completion accounts.
What does this mean for me?
The decision is a somewhat unexpected outcome.
It may be fair to say that the term "notice" tends to refer to more formal communications and the terms "notification" and "notify" refer more to any way of making someone aware of something.
However, contracts generally use the two terms interchangeably, and we find it unlikely that parties would generally understand the different terms to indicate different processes or requirements.
The decision is also in striking contrast to the previous judgment in Hughes v CSC Computer Sciences Ltd [2025] EWHC 302 (Comm), in which the High Court found that earn-out calculation statements did fall within the ambit of the contract's specific notice requirements, even though they were not described as "notices". (You can read more about whether earn-out calculations were validly served under contractual notice provisions in our separate piece.)
It is possible to explain this by the fact that, in< em>Inspired, the specific notice requirements applied only to "notices", whereas in Hughes, they applied to "any notice or other communication". In Hughes, the earn-out statements were "communications" that fell within the scope of the notice requirements. Had the notice requirements in Inspired employed the same language, the outcome may have been different.
Although this case related to a share sale and purchase agreement, the principles are applicable to any commercial contract. The key take-away is that an agreement should make it crystal clear which types of notice, notification or other communication are subject to the specific contractual notice requirements and which are not.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
