When should your business send a notice of breach of contract, and what must it state before the debt is claimed or the contract is terminated?

When to send a notice of breach: before the debt falls due and before termination

The right time for a notice of breach is after a specific breach of a written contractual obligation has occurred, and before you take any step that is hard to reverse. Do not wait until the whole debt falls due or until you decide to terminate, because a breach that is not documented at the time is hard to prove months later, and your silence may be read as acceptance. In exchange contracts, the law treats a defect in the subject of the contract that custom does not tolerate as a breach of the obligation, so delivering defective goods or a service below the agreed specifications may in itself be a reason for a notice.

• With a customer: a late milestone payment, failure to provide a guarantee or a document it undertook to give, or failure to let you carry out the work, before the rest of the amount falls due.
• With a supplier: late delivery, goods that do not meet the specifications, or short quantities, before you decide to terminate the supply agreement or contract with a replacement.
• With a tenant: using the premises for a purpose other than the one agreed, failing to carry out the agreed maintenance, or breaching a contract term, after checking what the lease itself says and the Ejar platform procedures before any step.

The law lists cases in which formal notice is not required, among them where the parties agreed expressly or impliedly that the debtor is on notice as soon as the due date arrives, where the debtor declares in writing that it will not perform, and where performance has become impossible or pointless because of the debtor's own act. Even so, a written notice remains a useful piece of evidence in these cases, because it records the facts, the date and your position on them in one document.

What the notice of breach states: the checklist section by section

A strong notice is short and clear, and it answers six questions after which the other party cannot claim it did not understand what was asked of it. Check every section before sending, because a gap in any of them is the first thing the other party will rely on in a dispute.

1. The clause breached: identify the contract by its date and parties, then the clause, annex or purchase order breached by its number, and quote the obligation as written without a broad interpretation.
2. The facts: state what happened with specific dates and numbers, such as the invoice number or the agreed delivery date against the actual one, and refer to the supporting documents without accusations or general labels.
3. The cure demanded: ask for a specific, measurable act, such as paying a named instalment, replacing a shipment, repairing a defect or providing a document, not just compliance with the contract.
4. The time allowed: state the cure period the contract gives if it provides one, otherwise a reasonable period suited to the nature of the obligation, and state clearly the date from which it runs.
5. The consequences: set out what you are entitled to do under the contract and the law if the time passes without a cure, such as claiming performance or compensation or terminating the contract, and expressly reserve all your rights.
6. The delivery channel and its proof: send the notice through the channel the contract's notices clause provides, and keep proof of receipt and its date.

As for the time allowed, we do not give a set number of days here. The law allows a creditor whose debtor is late in performing to set it a reasonable period for performance, and the right period follows what you agreed in the contract and the nature of the obligation itself: fixing a defect in a technical system is not the same as paying an instalment. Judging the right period in your dispute is a matter for your lawyer to review.

How the notice of breach differs from the demand letter and the termination notice

Many businesses mix up these three documents and send one in place of another, claiming an amount that is not yet due, or ending a contract without giving the other party a chance to cure. Each document has a different function and timing, and putting them in the right order protects your position.

• The notice of breach B-06: identifies the obligation breached, demands a cure within a set time and reserves your rights. It can be sent before any amount falls due, while the contractual relationship is still running.
• The demand letter B-01: claims a specific amount that is already due, such as an overdue invoice, and asks for payment within a set time. It is a collection document, not a cure document.
• The contract termination notice B-07: announces the end of the contract based on a contractual right or on the cure period passing without a response, and states the termination date and what follows from it.

The usual sequence is the notice of breach first: if the breach is cured, the matter ends and the contract continues. If it is not cured, you move to a demand letter for the amounts that have fallen due, or to a termination notice if termination is justified. Between these steps the other party may offer an acknowledgment of debt or a settlement, which our guides on the acknowledgment of debt and on settlement before the enforcement court explain.

The delivery channel and proof of receipt

A notice whose arrival you cannot prove is worth little more than a notice never sent. The Civil Transactions Law provides that formal notice may be given by any means agreed between the parties, or by any means the law prescribes for notification, including filing a claim or any other judicial step. So the first thing to open before sending is the notices clause in your contract.

• Read the notices clause: the address, the designated email, the name of the addressee, and any language or form the contract requires.
• Send through the agreed channel, and if you add another channel for speed, make it an addition, not a replacement.
• Keep proof of receipt: the delivery receipt, the email record, or the recipient's signature, together with an exact copy of the notice as sent.
• Record the date of receipt, because it is usually the date from which the cure period runs.
• Do not rely on a phone call or a verbal message, and write down any reply you receive and add it to the file.

If the time passes without a cure: from notice to termination

If the other party does not cure the breach, a party to a contract binding on both sides may, after giving formal notice, ask for performance or rescission of the contract, with compensation in either case where warranted, and the court may refuse rescission if the part left unperformed is of minor importance compared with the obligation. The contract may give a right to rescind without a court judgment, but that agreement does not remove the need for formal notice unless the parties expressly agreed to waive it. In practice, this means the rescission clause in your contract does not, as a rule, spare you the notice of breach.

On rescission the parties in principle return to the position they were in before contracting, while in time-based contracts such as a lease or an ongoing supply the rescission has no retroactive effect. Rescission does not remove the dispute settlement clause or the confidentiality clause unless agreed otherwise, so the arbitration or jurisdiction clause survives termination. This is where template B-07 comes in: it documents the termination, its date and its consequences, and refers back to the earlier notice of breach and its cure period.

How the notice of breach prepares your file for enforcement

A notice of breach on its own is not an executory instrument. The new Enforcement Law permits forced enforcement only on an executory instrument for a specific right that is due, and it lists the executory instruments, among them final judgments, orders and decisions of the Kingdom's courts, arbitral awards, notarised settlement agreements and conciliation records, bills of exchange and promissory notes registered on the national electronic platforms, cheques, and contracts and acknowledgments notarised under the Notarization Law. The value of the notice is that it builds the road to one of these instruments: a notarised acknowledgment, a notarised settlement, or a judgment in a claim whose file rests on established facts.

• The signed contract, its annexes and the related purchase orders.
• The notice of breach as sent, with proof of receipt and its date.
• The documents supporting the facts: invoices, delivery records, photographs and correspondence.
• Any reply from the other party, and any acknowledgment or settlement offer it made.
• The later termination notice or demand letter, if you reached that stage.

Because the new implementing regulation organises the enforcement procedures and their details, do not rely on published summaries of its periods, fees or penalties: go back to its official text or to your lawyer before any application. Sighaty's guides on the demand letter, the acknowledgment of debt, settlement before the enforcement court, and the Enforcement Law implementing regulation cover the steps that follow the notice of breach on the collection ladder.

Frequently asked questions