Contract Notice Provision: Everything You Need to Know

Contract notice provision is a clause in a construction contract that requires the contractor to send a notice to the owner about any changes to the project. 3 min read updated on September 19, 2022

Contract notice provision is a clause in a construction contract that requires the contractor to send a notice to the owner or a higher-tier contractor about circumstances that necessitate changes to the project cost, timeline, order, and others.

The Importance of Knowing and Complying With Your Contract's Notice Provisions

All parties are happy when the project is progressing at a steady pace. However, unforeseen occurrences can create problems that may delay the delivery date and increase cost, leading to discontent between the parties. When these problems arise, it's important to be aware of your contract's notice provisions as it plays a vital role when claiming recovery for entitlements.

It's important to understand your contract's notice requirements before you start experiencing any challenges on the project. Understanding your contract's notice provisions is essential for protecting your contractual entitlements in case any problems arise that can derail your work. Despite being simple to implement, many contractors find it difficult to uphold the requirements of their contract's notice provisions or send their client notices when issues arise, jeopardizing their ability to recover valid entitlements.

Key Issues Related to Notice Provisions

How Do Contract Notice Provisions Work?

Contract notice provisions are essential to construction contracts that require the contractor to provide notices to the project owner or another contractor when valid claims arise over additional costs, delays, or increased scope of work among others. However, notice requirements, as well as the duration for notice on various issues, may depend on the type of contract.

Many contractual disagreements arise from notice provisions and failure to comply with the requirements of the notice provisions. For this reason, parties must be careful to comply with notice provision requirements concerning potential claims, changes to the scope of work, and extension of the project timeline. To be able to preserve valid claims, contractors and their clients must comply with notice requirements. The requirements of contract notice increase with the value of the project. The strictest notice requirements are typically related to notice of potential claims for extension of time, increased cost, and other adjustments to the original contract.

Do Notice Provisions Vary?

Notice provisions vary from contract to contract, making it advisable to review the provision details for each contract type for the following reasons:

• Review the time limit for notice provision. The time limit depends on the contract but typically ranges from seven to 21 days. It can also be as short as two days or as long as 30 days. It's important to know the notice deadlines for individual projects as a failure to send the notice before the time limit often leads to disagreements.
• Contractors also need to know the number of details and the content that must be in the notice for each contract. In some contracts, the notice provision requires only the basic details while the supporting paperwork can be sent at a later date. However, other contracts might require the initial notice to contain more in-depth details.
• Contractors should provide details of any documentation to support their claims and when the notices were sent as this is important to prove compliance with the notice requirements. The contractor must prepare relevant supporting documents and details before issues arise to allow them to satisfy compliance requirements when problems come up eventually.
• Most construction contracts appoint a representative who receives all official notice requirements regarding the contract. You need to know the recipient and understand the procedure for changing the recipient.
• The process of sending the notice such as email, courier fax, certified mail, or personal delivery. Most contracts notices are written but what constitutes "in writing" has also been a source of disagreements. Experience has also shown that project documentation like project schedule updates and meeting proceedings constitute written notice. Also, you have to be clear about whether notices sent through emails and other electronic media can be considered as "in writing."

What Are the Jurisdictional Differences in Notice Disputes?

Contractors that operate in multiple states must not conclude that the application of jurisdiction on notice provisions is the same across all states. Individual jurisdictions treat notice provisions differently, and you have to know the process used by the courts of the states where you work.

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