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F E Smith
F E Smith, Advocate
Category: Law
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Experience:  I have been practising for 30 years.
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We are a software company and would like to amend our

Resolved Question:

We are a software company and would like to amend our existing contract so that it is less open to interpretation. We would also like to have it so that it renews annually unless we receive sufficient notice of termination form our clients.
Submitted: 7 months ago.
Category: Law
Expert:  F E Smith replied 7 months ago.

Do you want someone to look at the whole contract or just to look at a particular section of it?

Customer: replied 7 months ago.
There are just a couple of sections that refer to each other that we would like amending.
Customer: replied 7 months ago.
Please see the attached contract with 3 related sections. We would like you to provide us with suitable wording to address our needs as follows:
As our clients tend to stay with us for several years, we want to avoid having to send them a new contract at the end of each year. We would like to be able to send them a contract at the start of the relationship that automatically renews for each and every year unless the client gives us 6 months notice of termination prior to the end of each year.
Expert:  F E Smith replied 7 months ago.

There are several ways of doing this although the end effect is the same. You could have a (for example) 5 year contract with the right to break it every 12 months and the right for you to review the costs every 12 months or you could have a 12 month contract which rolls over every 12 months and not cancelled.

I assume that after clause 4, where it says Commencement Date: you put the actual date of commencement there.

The clauses in red are largely OK. At the end of the first line of clause 5 phase 3 at the words after the date, “unless extended in accordance with clause 8 of Schedule 3.” Then get rid of the next line commencing See Schedule.

Clause 2.1, get rid of +RPI Variations.

The ongoing cost from year 3 onwards will be the greater of the ongoing cost from year 2 or the ongoing cost from year 2 plus a percentage in respect of any increase in the greater of the Retail Price Index all the Property Index or any other index which Mosaique acting reasonably shall consider appropriate.

At the beginning of clause 8 in Schedule 3 and before 8.1 and the following words: “Subject to clause 5 of Schedule 1 and clause 2 of Schedule 2:”

You need to be aware that there is no guarantee that you would be able to force the 12 month rollover. There is case law that someone cannot accept by silence which is what you are trying to do here. As it is now, it is probably as robust as it could be. Rolling contracts are not looked on favourably by the court unless there is an ongoing and reasonable cancellation period. Six months prior notice is probably too harsh because things can change dramatically in six months. I would prefer it to be 3 months.

F E Smith, Advocate
Category: Law
Satisfied Customers: 8720
Experience: I have been practising for 30 years.
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