| Popis: |
This study concerns the obligation to notify the breaching party of a breach of contract, when the breach of contract consists of fiduciary negligence in the context of lawyer and auditor services. More precisely, the essay examines if (i) such an obligation exists, and if so, (ii) during what time such notification (“notification period”) is to be made and (iii) when the notification period commences. Lastly, it seeks to clarify the legal consequence of neglecting to give notice within the notification period. The analysis includes a discussion about the required form and content of the notice. The used method of research is legal dogmatics with a more liberal approach, referred to as legal analytics. To adequately assess the mentioned legal areas of interest, it has been necessary to distinguish the legal institute of notification. This has been done by a demarcation towards statutory rules of limitation and legal principles of inactivity that causes loss of contractual rights. The study solely deals with the duty of notification as a principle according to which a party may not be inactive if the party wants to retain their right to remedies for a breach of contract. The study finds that there is a duty to give notice about non-performance to the counterparty (i.e. fiduciary negligence), even in the absence of any statutory provision regulating the duty. This duty extends to lawyer and auditor services. The notification period commences when it is likely that there has been damage, usually in terms of economic loss, and there is reasonable reason for the client to assume that the damage is a consequence of fiduciary negligence. The length of the notification period is highly dependent on the circumstances of the specific case, but case law from lower instances indicate that a notification period between three to six months is deemed reasonable. Regarding the legal consequence of a neglected notification, there is convincing support in both statutory provisions by way of analogy and in case law, that if a party neglects to give due notice to its counterparty, the same party suffers a total loss of remedies for the breach of contract. In summary, the legal situation can be said to have moved in a stricter direction for the non-breaching party, taking into account recent case law from the Supreme Court. Notwithstanding the mentioned, a need for clarification from the Supreme Court remains. More specifically, there is still ambiguity regarding the specific circumstances that are necessary for the notification period to commence and the length of the notification period. |
