Is your IT implementation project in delay or suffering from scope creep? Technology disputes lawyer, James Watson, explains the importance of complying with contractual notice provisions.

IT project implementation contracts often include strict and prescriptive requirements for customers to be given timely written notice by the supplier if a project dictates that additional costs, steps or time are required.

It is common for such contracts to contain stringent notice provisions that require a party to take specific and sometimes onerous steps if a party is to receive the benefits conferred by such clauses.

The precise wording of such clauses should be carefully negotiated, kept in mind, and followed by both suppliers and customers during the lifetime of an IT implementation project so that there can be no doubt as to whether relief is available under such clauses. It is essential for those delivering the contract to remain familiar with the specific circumstances that would trigger a requirement to notify. Of equal importance is then actually following the steps required by the clause, to the letter, if you are to avoid unhelpful disputes as to whether the clause has been complied with and if the relief sought is to follow.

It is not surprising that the Courts require contracts to be clear if the giving of a notice is to constitute a condition precent to allowing more time or making one party liable to pay more money. If a requirement for giving notice is not a condition precedent to more time or money, then the only remedy available might be damages for breach, to the extent any breach or loss can be proved.

The recent case of Tata Consultancy Services Ltd v Disclosure and Barring Service [2024] EWHC 1185 (TCC) provides helpful guidance as to when a clause might amount to a condition precedent. Unsurprisingly, the Court confirmed that the question of whether a clause amounts to a condition precedent will usually turn on the precise words used. The Courts will not lightly assume or infer that the parties have agreed that a party's particular rights are subject to complying with identified conditions. The contract should contain specific and express language to evidence such an intention.

Whilst it is helpful for the parties to use the phrase "condition precedent" or provide an explicit warning of the consequences of non-compliance, this is not necessary. The absence of such wording is not fatal. Instead, it is the presence of language used that imposes an obligation as to the procedure to be complied with that is necessary. An example of this would be use of the words "shall" or "must". Another relevant factor is the use of words inferring conditionality, eg "if a party gives written notice, then …". Additionally, the more feasible and clearer the process that must be complied with, the more likely the court will accept that the parties intended for the clause to amount to a condition precedent.

In summary therefore, if a party wishes to ensure that it can benefit from the relief offered by such clauses, then it should (a) pay close attention to the words that are included in the contract at the outset; (b) be familiar with and keep in mind those identified conditions and the procedure to be complied with throughout the lifecycle of the IT deployment; and (c) follow those provisions carefully and timeously to the letter, should the need arise.

Please contact James Watson on +44 (0)7968 559 173 or [email protected] should you need advice on the issues discussed in this note.