M&A – Court of Appeal decision on the reasonable detail required in a claims notice

The Court of Appeal has held that a buyer’s notice of claim complied with the requirements under a share purchase agreement (SPA). In doing so it took into account the fact that the seller already had knowledge of the events leading to the claim.

At issue was whether the buyer’s notice contained “reasonable detail” of the matter, as required by the SPA. The Court of Appeal found that the notice did contain reasonable detail and so was valid. What is reasonable must depend on all the circumstances, but the court could take into account whether the recipient already had knowledge of the underlying events when determining whether sufficient information had been provided.

In cases such as this one, where there was a requirement to give “reasonable detail” and the recipient already had knowledge of all of the relevant information, a court should be “slow to reach” the conclusion that a notice was defective if it did not contain further information which would have served no useful purpose to the recipient.

It is important to note that whether a notice has been given in accordance with contractual requirements will turn on the precise contractual wording and the factual background to the dispute.

The decision (Dodika Ltd v United Luck Group Holdings Ltd [2021] EWCA Civ 638) is discussed in more detail here on our Litigation Notes blog.