The recent case of John Forrest & Others ("F") v John Glasser and John Whitley ("G") provides some guidance on notification of warranty claims.

Subscription and acquisition agreements were entered into between F and G. Both of the agreements stipulated that F had to inform G of any breach of warranty as soon as practicable and also within three years of the date of completion.  'Without prejudice' to this F had to provide G as soon as practicable with sufficient information to enable him to investigate and respond to the claim.

Two months before the three-year anniversary F informed G that he was concerned about some accounting discrepancies and that there was a 'potential warranty claim.'   After some correspondence a letter outlining F's actual intention to make a claim was received on the day of the third anniversary. However it was not until one year later that F issued the claim for breach of warranty. G argued that the claim was time barred and the High Court agreed saying that the original letter had not provided enough details of the claim to enable G to investigate and respond to the claim.

F successfully appealed and the court held that the wording of the clause was plain:  'Without prejudice' meant that it was sufficient for F to inform G that there was a claim, there was no duty at that stage to provide G with details.  It should be noted that when making a claim it is vital to follow the wording of the agreement to the letter.

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