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Alex J.
Alex J., Solicitor
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My company (Company A) would like to put a contract in place

Customer Question

My company (Company A) would like to put a contract in place with Company B for it to carry out satisfaction surveys of Company A's customers (customers which stock Company A's products/brands). The contract is to be exclusive for a fixed term of 6 years, with mutual termination rights for material breach and insolvency. Company A will give Company B contact details for each of Company A's customers (including address, email and phone details) in order for Company B personnel to call at the premises and carry out a survey. Company B would also like to use Company A's customer contact details to advertise other Company B services to those customers. Company B will then produce reports containing Company A's and the customers' logos. Company A wishes to publish the reports on its website. Company A has agreed to pay Company B £X in advance before the services commence. Monthly payments will apply thereafter on 120 day payment terms.
What potential issues should Company A consider before entering into the contract and what additional information might be needed?
Submitted: 1 month ago.
Category: Law
Customer: replied 1 month ago.
The contract would be governed by either English or Scots law if that helps. Many thanks.
Expert:  Nicola-mod replied 1 month ago.
Hello,
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Nicola
Customer: replied 1 month ago.
Hello Nicola - I am happy to continue to wait for an answer. Am I likely to get an answer today?Thanks!
Oliver
Expert:  Nicola-mod replied 1 month ago.
Hello,
We will continue to look for a Professional to assist you.
Thank you for your patience,
Nicola
Expert:  Alex J. replied 1 month ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Is the sale of these products in anyway regulated by a regulatory body? Does company A have specific people it has a contact with at the customers? Will company A continue to sell to the clients? Will the company B reports be for internal use only? Kind regards AJ

Customer: replied 1 month ago.
Good morning AJ. Thank you for getting back to me and for your request for further information. Apologies, at this stage, we do not have any further information other than the below.The only information we have at moment is that Company A is a producer of alcholic beverages. The customers are all pubs (therefore B2B) which stock the products of alcholic beverages being provided by Company A. Company A will continue to sell to the customers. No - Company B will provide Company A the reports to publish on Company A's website.I am not aware that the customers have given permission to be contacted by either Company A or Company B. Would they need to be under data protection laws before entering into the contract? Nothing has been agreed as to what will happen if none of the customers wanted to reply to the survey.The overall value of the work is £100K.If a contract was prepared on the basis of the terms above and Company B performs the services of carrying out satisfaction surveys, would Company A be able to exit the contract before the end of the fixed term? Would it make a difference if there was no signed contract? Can we look at the conduct of the parties?Many thanks in advance.
Expert:  Alex J. replied 1 month ago.

Hi, Thank you. My main concerns are as follows:

(i) Data Protection element really only comes into play if you are handing personal data from one party to another - for example do you have names and addresses of pub landlords? If this may be personal data. Company B should give company A an indemnity for any breaches of the Data Protection Act 1998.

(ii) The contract should be non exclusive if A is going to continue to sell to its customers;

(iii) The reports should become the property of company A once they are produced;

(iv) The payment terms should contain a provision to charge interest, and terminate the contract in the event of non payment - given the long payment terms;

(v) Ask whether the customers consent to being publicised on company As website.

(vi) Does company B need any kind of licence to sell the beverages? If so company B should provide a warranty that it has all licenses and permissions to provide the service.

Can you provide me with any further information?

Customer: replied 1 month ago.
Thank you for your reply.Company A is going to be providing Company B with contact details of each of its pub customers (including address, email and phone details - this may or may not include personal data I suppose). To be clear, Company B is not selling any product. Company B is only carrying out satisfaction surveys.If a contract was prepared on the basis of the terms above and Company B performs the services of carrying out satisfaction surveys, would Company A be able to exit the contract before the end of the fixed term? Would it make a difference if there was no signed contract?
Expert:  Alex J. replied 1 month ago.

Hi, Thank you. You could include a termination for convenience clause? A clause that states the contract is terminable of 3 months notice. If the contract does not have a monthly fee and is non exclusive, you could just stop using the service. Kind regards AJ

Customer: replied 1 month ago.
Hi. Thanks for your reply. Unfortunately the proposed contract does not have a termination for convenience clause, only mutual termination rights for material breach and insolvency. If the contract has a monthly fee and is made non exclusive, provided it had provision to terminate if monthly payments were stopped could I just stop using the service? Or would I be in material breach and have to pay for the remaining term of the unsigned contract?
Expert:  Alex J. replied 1 month ago.

Hi, Thank you. Not signing the contract wont make a difference I am afraid, as you have the contract you are agreeing that these are terms of the agreement between you. If you then buy company B services you will be bound by the terms. Six years is too long for a service provision, there is no commercial justification for it. If you stopped paying the monthly fee you would be potentially in breach. Will they not agree a right to terminate for convenience? Or even a shorter term? I would be most grateful if you would kindly rate my answer. Kind regards AJ

Customer: replied 1 month ago.
Thanks Alex. I agree with you that 6 years is far too long without having a right to (even mutually) terminate for convenience. Happy to rate your answer. Thanks again.
Expert:  Alex J. replied 1 month ago.

Hi, Thank you very much. I am happy to assist any further if you have any follow up questions? Kind regards AJ

Customer: replied 1 month ago.
Can we include any contract protection in terms of the £100K advance that the company carrying out the satisfaction surveys requires before the services commence? Many thanks.
Expert:  Alex J. replied 1 month ago.

Hi, Thank you. Can you not pay that in installments?

Customer: replied 1 month ago.
No, the service company insist on advance payment. I agree that payment in instalments appears to be more sensible but on what basis?
Expert:  Alex J. replied 1 month ago.

Thank you. What is the £100k advance payment for? Do you see value for this - is there an implementation process? are they setting up templates for you?

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