Terrorism, Technology and "Notice"
 
April 29, 2002
 
Kathryn W. Oberto- Orlando

When drafting and/or reviewing a lease, great emphasis is placed on the key, deal-specific business terms of the lease, leaving the standard, non-deal specific provisions to be placed on the last few pages of the lease without much review. However, in light of recent events, many of these previously innocuous, "boilerplate" provisions, which apply to all provisions of the lease, may have a greater effect on the lease than in the past.

An example of one such provision is the notice provision.  A typical notice provision reads as follows:

Any notice, demand, consent, approval, request, statement, document or other communication required or permitted to be given to or served upon either party hereto pursuant to the Lease shall be in writing and shall be sent by a reputable overnight courier, or registered or certified mail, return receipt requested, postage prepaid, addressed to those addresses set forth in the Lease Summary; provided, however, that Tenant may give Landlord telegraphic or facsimile notice of the exercise of an option hereunder or of the need for emergency repairs. All such communications mailed or delivered by overnight courier in accordance with the foregoing provisions shall be deemed to have been given or served as of the date of first attempted delivery as shown on the return receipt in the case of a mailing or the first business day after deposit with such courier for delivery on the next day in the case of overnight courier.

This provision provides two types of delivery for all notices - overnight delivery and U.S. mail - and two additional types of delivery for exercising an option and/or emergency repairs - telegraph and facsimile. Notice is deemed received on the first business day after deposit with the courier for overnight deliveries and on the first attempted delivery as shown on the return receipt for U.S. mail. This provision is sufficient in most instances. But what about those instances when it is not? The purpose of this article is to point out some of the deficiencies in a fairly specific notice provision and to suggest ways to deal with the problems that may arise.

Overnight Courier

The first acceptable means for notice delivery set forth in the example provision is overnight courier. Once the notice is deposited with the courier, the party delivering notice has no further obligations and the party to whom notice is to be delivered is deemed to have received the notice the following day. But what happens if outside forces cause the building to which the notice is to be delivered to close for an indeterminate amount of time? What happens if, after delivery by the party delivering notice to the courier, the courier's offices are then closed before the notice can be delivered due to similar causes? What happens if both the courier's office and the office for delivery are open, but intervening forces prevent the courier from following its route (e.g. flights are grounded/highways closed) and delivering the notice?

U.S. Postal Service

Delivery of notice by the U.S. Postal Service poses similar problems with respect to delivery and the timing for delivery. Notice by U.S. mail is deemed received on the "first attempted delivery." What constitutes "first attempted delivery?" If notice is taken to the address to which notice is to be delivered but the building is closed, is this an attempted delivery? What happens if the post office to which the notice was deposited is shut down before the notice can be forwarded to the receiving party? Does this mean that there can be no attempted delivery until such time as the post office is reopened?

Faxes and Telegrams

The sample provision is silent with regard to the timing for delivery of facsimile and/or telegraphic notice, but similar issues arise. When is notice effectively delivered in the case of facsimiles and/or telegrams? Is notice delivered when it is successfully transmitted to the appropriate number or when it is received by the receiving party? Again, what happens if notice is successfully sent, but the office to which it is sent is closed due to outside forces and cannot be physically received by the appropriate party?

In all of these instances, does it matter if the party delivering notice has (or does not have) knowledge that intervening forces have prevented notice from being delivered? Should it matter?

Until recently, while conceivable, these issues rarely arose. However, commencing on October 17, 2001, the Hart Senate Office Building in Washington, D.C., was closed for 95 days due to the detection of anthrax spores. Later that same month, anthrax spores were detected at the Brentwood Post Office in Washington, D.C. This facility is still closed while the building is rehabilitated. While extreme examples, these two instances highlight new problems that may arise in a changing world. With these, and less dramatic but still disruptive, concerns, how should the notice provision be modified to assure that notice is being delivered to the appropriate party in an appropriate time frame?

The Internet as a Communications Medium

Over the past several years, technological advances have created additional means of communication. Laptop computers are becoming commonplace for today's businessperson. Even without laptops, people have numerous ways to access the office without physically being at the office. With each passing day, Internet e-mail is becoming a more popular, timely and effective means of communication. By adding Internet e-mail as an appropriate form of delivery, it is possible to communicate with the people in an office without necessarily having to contact the physical office. While Internet e-mail does not solve the problems of inability to receive notice when the office building is closed if the receiving party does not have a laptop or other means of Internet access, at a minimum, e-mail can be a first step in delivery of notice to a third party.

In addition to e-mail, facsimiles and voice mails can be received through the computer. By modifying the notice provision to state that facsimiles are delivered upon receipt to the party to whom it is sent, then, if the receiving party has the technology, faxed notice could be sent and received without physical presence in the office. Voice mail is also available either over the computer or retrievable from the office without being in the office. While difficult to document whether a voice mail has been received, it is a method of delivering notice that could, at a minimum, notify the receiving party that there is an issue and the party sending the notice needs to be contacted for further details. For this reason, phone numbers should be added to notice provisions.

Notice by Two Means

As some means of communication are harder to document than others, another suggestion is to require notice be delivered by two different means. For example, if notice was delivered by U.S. mail and Internet e-mail, it is more likely that at least one notice will reach the intended party in a timely manner. In the event an office is forced to close for an extended period of time, it is likely that Internet services will be available outside of the building and it is probable that e-mail would still be received. In the interim, it is not unlikely that the displaced office staff will establish an alternate location and/or place for mail delivery. In the event Internet services remain unavailable, notice would still reach the intended party through the mail, even if that delivery is delayed. Combining the traditional means of delivery (U.S. mail and overnight courier) with technologically advanced forms of communication (e-mail, computer facsimiles and/or voice mail) creates a greater likelihood that notice will be received by the intended party in the face of unexpected events.

Notice to Two Recipients

In addition to delivering notice by two different means, notice could also be delivered to two different parties. Many notice provisions include a courtesy copy provision, which requires that notice be delivered to the primary party and a related, third party and/or another department in the same company. By delivering notice to two different parties in two different locations, there is a greater likelihood that at least one of the parties will receive the notice. However, if this provision is incorporated into the lease, the related party should be one for which there is a high degree of probability that it will then be able to get in touch with the primary party to whom notice is to be sent or, in the alternative, to act on its behalf. Similarly, the notice provision could be modified to add both a physical address and a post office address. If access to the building is denied, at least notice could be received by the appropriate party at a post office box.

Force Majeure Provision

The final suggestion is to modify both the notice provision of the lease, but its force majeure provision as well. Consider whether a lease's force majeure provision applies to its notice provision and whether you desire force majeure to be a defense for failure to deliver/receive notice. As the notice provision is modified to address the concerns set forth above, the force majeure provision should be simultaneously reviewed.

Due to the complexity of issues and the new concerns that are likely to arise, it is impossible to prepare a foolproof notice provision that will cover all situations. However, by adding parties, locations and/or combining technologically advanced means for delivery with traditional delivery methods, it is more likely that notice will be delivered and received as intended.

For more information, contact Kathryn B. Williams at 888-688-8500 or via e-mail at kwilliam@hklaw.com.