Most commercial contracts include:
- Notice clauses – requiring written notice of breach.
- Cure periods – giving the breaching party time to fix the problem.
- Escalation steps – how to proceed if the problem isn’t fixed.
Ignoring these steps can turn the innocent party into the one who is actually in breach. Following them protects you, even if the other party seems difficult or uncooperative.
Why does following the Process Matters in Business Agreements
Most business disputes are won by those who have correctly followed the process the contract set out. A recent Court of Appeal case, [2025] EWCA Civ 1206, highlights this perfectly.
The Scenario
Two shareholders let’s call them Harry and George they had a shareholder agreement contract that said:
If either party breaches the agreement, the other must give ten days’ written notice to allow the breach to be fixed before taking further action. The further action being a transfer of shares – making the person who committed the breach hand over there shares to the ‘injured party’ and effectively providing the ‘injured party’ with sole control.
This “notice-and-cure” clause is standard in commercial contracts. It’s designed to prevent overreaction and give the breaching party a chance to make things right.
George transferred shares in a way that looked like a breach. Harry found out but did not give formal notice to George in accordance with their contract as he had assumed the breach couldn’t be fixed (or he had been advised so). Harry relied on an previous case, Buckland v Bournemouth University [2010], which said a serious breach might be irremediable. The Buckland case while referred to as case law, was based on an employment law contract and not on a similar share agreement contract. Harry went to court to try to enforce the transfer clause immediately which was written in his contract.
The Court’s Findings
- Process is mandatory – the notice-and-cure steps must be followed. Skipping them means you may lose your contractual rights.
- Assuming a breach can’t be fixed is dangerous – even serious breaches may be “capable of remedy” if the mischief can be corrected (for example, by returning shares or paying compensation).
- Timing of notice – the contract does not specify when notice must be served after discovery of a breach. The period runs from the date notice is given, not from the date of the breach or discovery. The clause can be invoked any time the innocent party becomes aware of a continuing breach that is capable of remedy.
- Cure period before transfer – there is always a notice period followed by a cure period (here, ten business days) before a deemed transfer can occur. The breach must remain unremedied (not fixed) at the end of the cure period for the transfer mechanism to operate.
- Self-executing clause – this is a clause that automatically triggers an outcome (like a deemed transfer) if its conditions are met, without further action by the innocent party. Even with a self-executing clause, you must comply with the notice and cure requirements – which is what went wrong here.
In short: Harry lost his case not because he was wrong about the breach, but because Harry did not follow the mechanism that was already written into the contract.
The Lesson
Even if you are certain the breach can’t be fixed:
- FOLLOW THE CONTRACT – stick to the notice-and-cure clauses exactly.
- Serve the required notice – in writing, specifying the breach and giving the breaching party the opportunity to remedy it.
- Allow the full cure period – give them the contractual time to fix the problem.
- Only then escalate – enforce remedies or consider alternative dispute resolution.
- Consider litigation as a last step – after all contractual options have been exhausted. While doing so, ensure you are aware of all legal time limits, including:
- those in your contract,
- procedural deadlines under the Civil Procedure Rules, and
- relevant court precedents that may affect your rights.
Following this process protects your rights and ensures the court is more likely to uphold the contract terms if enforcement becomes necessary.
Key Legal Terms
- Remediability/Breach capable of remedy
- Is a breach that can be fixed so that the non-breaching party is restored, as closely as possible, to the position they would have been in without the breach. Even serious breaches may be remediable if the breaching party can return what was taken or compensate financially.
- Repudiation / Repudiatory breach
- This occurs when one party indicates, by words or conduct, that they do not intend to perform their contractual obligations or cannot perform them properly. The innocent (non-breaching) party may then either accept the breach and terminate the contract or affirm the contract and insist on performance.
- Notice-and-cure clause
- a contractual provision requiring written notice of a breach and giving the breaching party a set period to correct it before enforcement action can be taken.
- Deemed transfer clause / self-executing clause
- a clause that automatically triggers a transfer of shares or rights if a breach isn’t remedied within the contractually prescribed period.
- Cure period
- the time given to the breaching party to remedy a breach after notice has been served.
Cases Cited
- Kulkarni v Gwent Holdings Ltd [2025] EWCA Civ 1206 – Court of Appeal ruling on breach remediability and notice requirements.
- Buckland v Bournemouth University [2010] – Employment law case cited by the losing party; not applicable where a contract has a cure clause.
Legal Disclaimer
This blog is for educational and informational purposes only and does not constitute legal advice. It refers to publicly reported cases and uses anonymised names to protect privacy. If you have a specific contractual issue, you should consult a qualified solicitor before taking any action.