Court narrowly construes law limiting contract-notice requirements

May 31, 2017

Under the Texas Civil Practice & Remedies Code, “a contract stipulation that requires a claimant to give notice of a claim for damages as a condition precedent to the right to sue on the contract is not valid unless the stipulation is reasonable. A stipulation that requires notification within less than 90 days is void.” Tex. Civ. Prac. & Rem. Code § 16.071.

In a recent case, an owner sought to enforce a provision in a construction contract which stipulated that the contractor had to initiate a “claim” against the owner within seven days of the event. The Court ruled in favor of the owner, holding that the parties’ freedom to contract should be respected. The Court drew a distinction between giving notice of a “claim” and giving notice of a “claim for damages,” reasoning that a claim under the provision at issue was just giving notice of facts giving rise to a claim for damage. A claim for damages, in contrast was a cause of action (such as a claim for breach of contract).

As such, depending on the contractual language at issue, this statute might not provide protection from short-notice periods in construction contracts. The statute is more likely to apply if the language requires suit to be filed within a certain time period, or otherwise equates a claim with a cause of action.

El Paso Cty. v. Sunlight Enters. Co., 504 S.W. 3d 922 (Tex. App.—El Paso 2016, no pet.).

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