Warranty Claims- buyer beware!

In Ipsos SA v Dentsu Aegis Network Ltd the High Court found that Ipsos, the buyer, had failed to comply with the 2 year contractual notification requirement when bringing a claim for breach of a warranty against Aegis, the seller, under the share purchase agreement.

Ipsos relied on two letters which had been sent to Aegis before the two year contractual limitation period had expired. The court held that when assessing the relationship between the parties and the context which the letters were written, the seller could not have been expected to know that these were notices of a claim. The letters had not referred to a claim notice, or what the claim concerned.

On this basis, no valid claim notice had been given within the 2 year requirement, and the claim failed. The case emphasises the importance of taking particular care when preparing a buyer’s contractual notice of warranty claim to ensure that the notice complies with the agreement; giving a whole new meaning to the Latin warning “Caveat Emptor”- Buyer Beware!