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Notification of warranty claims under a share purchase agreement

The High Court has stressed the importance of strict adherence to notification provisions when giving notice of a warranty claim under a share purchase agreement.

In 2014, Zayo Group International Ltd purchased the entire issued share capital of Geo Holdings Ltd, a fibre optic network provider. Among the sellers were seven senior managers of Geo, who gave warranties.

In 2015, Zayo sought to bring claims against the managers relating, among other matters, to alleged inadequate accounting provision for certain disputes.

The share purchase agreement provided that any claims had to be notified to the managers by 5 p.m. on 13 November 2015; that any such notification should be delivered by hand or sent by special delivery to the address specified in the agreement for the party in question; and that, if delivered by hand, the notice would be deemed to have been received at the time of delivery.

Six motorcycle couriers attended at Zayo’s office on 13 November to collect and deliver the notices, which were duly delivered to six of the seven managers by 5 p.m. One of the couriers arrived at the address specified in the share purchase agreement for the seventh manager, Ms Sheree Jaggard, at 2.24 p.m. On arrival, he was told that Ms Jaggard no longer lived there, but had moved to New Zealand. The courier then left, taking with him the notice, which he delivered to one of the other managers.

The court held that the provisions governing notice were clear and should be construed strictly. Since the notice had not been delivered by the relevant time to the address specified for Ms Jaggard, she had not been validly notified of the claim. It did not matter that she would not have received the notice if the courier had left it at the specified address. Nor did it make any difference that Ms Jaggard was in fact made aware of the claim by the other managers.

It was also held that, since the share purchase agreement provided that no warranty claim could be made against any of the managers unless it was made against all of them, the failure to give valid notice to Ms Jaggard meant that Zayo could not bring claims against any of the managers.

The lessons of this case are that notice provisions should be read carefully and complied with strictly, and that it is best not to leave giving notice of a claim to the last possible day.

Zayo Group International Ltd v Ainger and others [2017] EWHC 2542 (Comm)

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