It is not unusual for the seller of the business to impose a time bar on warranty claims. Recent cases have seen the Courts enforcing restrictions on warranty claims quite strictly. Purchaser must ensure the warranty claim fully complies with any contractual procedures.

In the most recent example, Ipsos S.A. v Dentsu Aegis Network Limited [2015] EWHC 1171 (Comm) the seller, Aegis, specified that the purchaser, Ipsos, must give notice of any warranty claims in a formal claim letter within two years after completion. Tthe claim would be barred unless legal proceedings were commenced (or the claim settled) within six months after that letter. So, a purchaser may not wish to send a formal claim letter too early as this would start the six month period for commencing legal proceedings. A separate clause required notification of matters which might give rise to a claim "as soon as practicable".  Failure to do so would not bar the claim but could impact the damages claimable.

Ipsos gave notice of a number of third-party claims that may give rise to warranty claims. However, it said expressly that this was not a Claim Letter within the meaning of the time bar. It sent a second, much fuller, letter shortly before the two-year period specified in the time bar expired. This gave more detail of the claims referred to in the first letter and also gave notification of an additional claim and asked for clarification of Aegis' position. Proceedings were commenced six months later. Aegis said the claims were time-barred because no Claim Letter had been served within the specified two-year period.

Ipsos argued that it had given sufficient information about the claims in the second letter and that it was clear that they intended to pursue warranty claims in respect of them. The Commercial Court decided that this was insufficient. The clause required a claim letter and a reasonable recipient of Ipsos's letter would have understood it to have been a clarification of the pre-claim notification not a claim letter sent for the purposes of the time bar (and which would have started the six month period for commencing proceedings). Accordingly, the claims were barred.

The lesson for purchasers is clear. If you have a clause like this send the claim letter in time stating expressly that it is a claim letter within the meaning of the time bar clause.

A crumb of comfort for purchasers was that the judge agreed with the earlier decision of Richard Siberry QC in ROK v S Harrison [2011] EWHC (Comm) 270, that the requirement that the claim letter must specify the facts underlying the claim "in reasonable detail" did not require the level of detail that would be required in due course when proceedings were issued.