Notice Clause

Summary

This clause is a notice provision, to be included in an acquisition agreement, that specifies the manner of delivery and time of effectiveness of required or permitted notices and may provide a procedure for changing notice information. This clause includes practical guidance, drafting notes, and an alternate clause. The parties may negotiate for strict or flexible notice provisions, depending on their perception of how these provisions are likely to affect their rights or obligations under the agreement. Buyers tend to favor more flexible notice provisions, such as those providing that notice is deemed effective upon transmission, without the need to prove receipt of the notice, because they will use the notice provision to inform the seller of an alleged breach of a representation, warranty, or covenant or to assert a claim for indemnification. Sellers typically will want notices to become effective upon receipt, to prevent any potential waiver of rights resulting from the failure of the notice to reach them. Buyers typically object to this standard because it could potentially allow sellers to avoid notices. A frequent compromise is to provide that notice is effective a certain time after transmission. For a full listing of key content regarding acquisition finance, see Acquisition Finance Resource Kit. For further information on notice clauses and other boilerplate provisions, see Critical Boilerplate in Acquisition Agreements.