Agreements often refer to a party giving notice “as soon as possible” after a particular event has occurred. There may also have been times that you have asked someone for a response “as soon as possible” and ended up sitting there twiddling your thumbs waiting to hear back. So, what does the phrase “as soon as possible” mean?
Corporate Solicitor Priyadevi Thakker explores a recent case where this phrase was considered:
The case concerned an insurance policy under which the insurer disputed whether it was required to provide indemnity cover to a company. The insurance policy contained a condition requiring the company to give written notice to the insurer “as soon as possible after the occurrence of any event likely to give rise to a claim”.
An accident occurred in September 2011 and the company informed the insurer of a claim relating to this accident when it was joined in as a party to legal proceedings around July 2013. So, was almost two years later soon enough?
The insurer tried to extend the phrase “as soon as possible” by arguing that it was not limited to specifying a period after the event within which notice must be given, but also that the obligation to notify arose when the state of knowledge of the company was such that it was, or should have been, possible to notify. But the company argued that the phrase did no more than specify how soon after the event notice must be given.
The Court of Appeal upheld the original decision that when the accident occurred it was not at least 50% likely that there would be a claim against the company. At that time, therefore, the accident was not regarded as an “event likely to give rise to a claim”. The Court of Appeal also rejected the insurer’s interpretation of the phrase “as soon as possible” and held that it was not entitled to deny liability to the company under the insurance policy.
The case shows that a widely used, but undefined, phrase such as “as soon as possible” is open to challenge and its meaning will depend on the surrounding circumstances. A similar conclusion was reached when both the English and Irish courts considered the meaning of “close of business” in separate cases last year.
In order to avoid any future thumb twiddling in anticipation, it is better to be specific about timescales so it is clear how soon a response is required.
For more information, please contact:
Priyadevi Thakker, Corporate Solicitor
T: 0116 285 9019