Everything in its own time: the importance of timing for contractual requirements
A recent decision in the Supreme Court of Queensland provides a timely reminder about the importance of carefully considering contractual provisions to identify the correct timeframe for provision of notices or performance of contractual obligations.
In Latimore Pty Ltd v Lloyd  QSC 136, Justice Bowskill considered a standard REIQ contract that was formed upon a sale by auction. The contract included a special condition that required the seller to provide a pool safety certificate to the buyer ‘7 days prior to Settlement’. The special condition was agreed to be an essential term of the contract.
It was common ground between the parties that 15 April 2020 was the day by which the pool safety certificate was required to be provided. At 5:03pm on that day, the buyer’s conveyancer wrote to the seller’s solicitor purportedly terminating the contract because the seller had failed to provide the certificate. At 6:31pm, the seller’s solicitor sent an email to the buyer’s conveyancer attaching the pool safety certificate.
The buyer argued that the pool safety certificate was required to be provided by 5:00pm on 15 April and relied on the notice clause in the contract. The notice clause stated that any notice provided after 5pm on a business day would be treated as given or delivered at 9am on the next business day. The buyer argued that the certificate was a ‘notice’ and therefore should be treated as being provided on 16 April.
The seller argued that the certificate was not a notice and the notice clause did not apply. The special condition did not specify a time by which the certificate was required to be provided, only that it be provided 7 days before Settlement. The seller relied on the general principle that, where a contract specifies a day by which something is to occur, satisfaction of the obligation may occur at any time on that day.
Justice Bowskill agreed with the seller and concluded that the special condition did not require the provision of a notice; rather, it required the provision of a pool safety certificate. The contract clearly distinguished between the giving of notice of something and the provision of an actual thing, as opposed to notice of it.
In reaching her decision, Bowskill J explained the prevailing approach to contractual interpretation as follows:
The contract is to be construed objectively, by reference to what a reasonable person in the position of each of the parties would have understood it to mean, having regard to the language used by the parties, the surrounding circumstances known to the parties and the purpose and object of the transaction. The focus is on the words used by the parties in the particular provision concerned, construed in the context of the contract as a whole.
As a question of construction, the notice clause in the contract did not apply to the provision of the pool safety certificate. Accordingly, the certificate had been provided within time and the buyer’s purported termination of the contract was invalid. Her Honour made an order for specific performance of the contract.
This case is a reminder that parties to a contract should always:
- Carefully consider the contractual terms to:
- distinguish between delivery of ‘notices’ and the performance of obligations that involve delivery of a ‘thing’ so that the correct timeframe for compliance can be identified;
- ensure timely performance of their own obligations; and
- avoid purporting to terminate a contract too early by assuming that an obligation must be fulfilled by 5pm on a relevant day.
- Ensure that contractual provisions clearly state the timeframes by which obligations must be performed, including by reference to specific times, if appropriate.
If you have any questions about the drafting, interpretation or performance of contracts, Crown Law can help.