Drafting tip: Have a backup plan in case notice-address change notices go astray

Many contracts specify the addresses to which notices must be sent. Such notice clauses in contracts usually say that either party can change its address for notice by sending the other party notice of the change. But what if the party receiving the change-of-address notice doesn’t update its records? That was the unfortunate situation in Comm’l Resource Group, LLC v. The J.M. Smucker Co., No. 12-3308 (8th Cir. May 30, 2014) (reversing district court). In that case:

• The lease agreement for a commercial building included an “evergreen” provision stating that the lease would be automatically renewed unless the tenant gave the landlord notice of termination no later than 180 days before the then-current expiration date.

• The landlord sent the tenant a change-of-address notice.

• Later, the tenant sent the landlord notice that it would be terminating the lease and moving out. But it sent the termination notice to the landlord’s old address; the notice was returned as undeliverable.

• By the time the tenant sent the landlord a new termination notice at the new address, the deadline for terminating the lease for that year had passed.

The tenant moved out anyway, and the court held that the tenant was liable for the full year’s rent — for a building that it no longer occupied.

Drafting tip: In the notices clause, state that a copy of each change-of-address notice must be sent to the attention of legal counsel, or of the CFO, or someone who presumably will be diligent about such things. Here’s some sample language, which will be going into the Common Draft notices clause in due course:

A party desiring to change its address for notice must give the other party notice of the change in accordance with the notice requirements of this Agreement; the notice of the change must be marked for the attention of the other party’s legal counsel, and for the avoidance of doubt is not effective unless it is so marked.