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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 70506
Experience:  Over 5 years in practice
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Hopefully you can help with this question! We are currently

Resolved Question:

Hi,
Hopefully you can help with this question!
We are currently in a 5 year service/hire agreement with a drinking water/cooler provider that comes to an end on the 1st of October.
The T & C’S state that if we wish to cancel this agreement then we have to notify the owner in writing not less than 90 days and not more than 180 days before the expiration of the term.
When we went to cancel this contract we were a month inside of the 90 days, so effectively we have given 60 days’ notice with which the service provider have said that because we did not cancel before the 90 days the agreement automatically rolls on for another 12 months!
Is this enforceable by the service provider? They knew of our intention to quit on many occasions (letters have previously been sent to terminate but due to the termination costs we let the agreement ride), we have also told the account manager of a number of occasions of our intention to cancel. With that in mind, should the service provider notified us that the contract was due to end and that it would automatically roll over?
Any help would be gratefully received as I’m eager to get out of this contract and it pains me to think we might have to roll over for another 12 months.
Many thanks
Adam
Submitted: 1 year ago.
Category: Law
Expert:  Jo C. replied 1 year ago.

I presume you are a business given the nature of the agreement?

Customer: replied 1 year ago.
that's correct
Expert:  Jo C. replied 1 year ago.

I suppose they didn't write to inform you of your right to cancel?

Customer: replied 1 year ago.
No they didn't
Expert:  Jo C. replied 1 year ago.

The essence of this is that this is a rolling contract. Their point is that you didn't cancel before the anniversary date in enough time to trigger cancellation without consequence. If that is what is in the contract then they can try to rely on that.

The OFT have criticised rolling contracts and many insurance companies and the like have taken to writing to warn people. However, it should be noted that the OFT guidelines are not law and so it doesn't really matter all that much whether they are happy or not.

There has been some caselaw that has suggested that very long rolling periods are unacceptable. Five years was the period cited so you do have that point. The argument is essentially that is an unfair term and so voice under UCTA. The only thing to note though is that did involve a consumer rather than a business and courts do generally expect business to be more sophisticated.

That said, the reality is that even if you do cancel and refuse to pay they only have a claim for lost profits and they may well not sue. It is rare that people do. You could always offer a lesser sum in full and final settlement of the debt if you want to make it go away.

Can I clarify anything for you?

Jo

Customer: replied 1 year ago.
Hi - Many thanks for your answer.
I think I will go back to them to try and reason. One point that wasn't covered was the fact we had sent cancellation letters on a few other occasions (although outside of the 180 days) - would this not go in our favour?
Expert:  Jo C. replied 1 year ago.

Not if the contract demands 180 days although another point you would have is that 180 days is a very long period of notice that might fall foul of UCTA too.

Customer: replied 1 year ago.
thanks - not sure if I understood the last part right. 180 days is a very long period of notice? or should it be isn't a long period of notice?
Expert:  Jo C. replied 1 year ago.

It is a long period of notice. Might be considered an unfair term under UCTA.

Customer: replied 1 year ago.
why would that be unfair?
Expert:  Jo C. replied 1 year ago.

Well, it could be argued it is designed to trap people into the rolling period.

Customer: replied 1 year ago.
Many thanks for your help :)
Expert:  Jo C. replied 1 year ago.

No problem.

All the best.

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