Claiming breach of warranty

 In a purchase of a business there are often time barred warranties in the sale and purchase agreement under which the buyer has to comply lest the basis of the claim be lost through the passage of time. The Court of Appeal (CA) has held that details of the claim need not be made-it is enough only to notify the seller that a claim was being made-details could follow.   

In John Forrest & Others v John Glasser and John Whitley the CA looked at the particular wording of the warranty and on its own peculiar wording held on the facts the claimant had sent a valid notice of claim to the defendant. JF had sent JG a letter headed “potential warranty claim”. Various emails and letters were then exchanged between the parties before JF formally issued a claim (claim letter) for recovery of his investment based on the breach of warranty-accounting irregularities. A year then passed before finally a claim was made.  

The CA looked at the facts and the claim letter that had been sent and noted the wording to the effect that further communications would follow but the purpose of the letter was to notify JG of the claim.   

The CA allowed the appeal by JF and overruled the High Court decision that said no reference could be in interpreting the contents of the claim letter to previous communications including the “potential warranty” letter.  

The CA interpreted the words of the claim letter sent giving the words their ordinary and natural meaning under normal interpretation principles and any reasonable recipient of the letter would understand it to be notification of the existing claim, by way of the “potential warranty” letter. 

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