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Jo C.
Jo C., Barrister
Category: Law
Satisfied Customers: 71041
Experience:  Over 5 years in practice
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Re: Contract Law/Small Claims Court. On 30/11/08 a Director

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Re: Contract Law/Small Claims Court.
On 30/11/08 a Director of our Company signed a 5 year a telecom maintenance contract at an annual premium .
In October 2012 and 4 years into this contract the annual premium invoice was received, but it had increased in cost. Our accounts manager queried the increased cost with the provider, and they informed her that they could revise the cost at a reduced rate .Unfortunately the paperwork which our accounts manager then signed was for a new 5 year contract. She had no knowledge that a new contract was being entered into, there was no mention of a new 5 year contract, and she was not authorised to commit the company to a 5 year contract. The email subject was "please e sign the Renrows Maintenance agreement" and the email said "hope you are well , please see the reduced maintenance agreement as discussed". She honestly believed that she had merely reduced the cost and not consented to a new 5 year contract.
In Oct 2013 we received an invoice for the period Oct 2013-2014.Our accounts manager telephoned and emailed the provider querying the invoice and informed them that as far as she was aware our contract ended in Oct 2013. No reply was received from them to this query. On 15th Oct 2014 we received another invoice for Oct 2014-2015. On 22nd Oct we received a Solicitors letter from The Thomas Higgins Partnership(THP) for the Oct13-14 invoice which we had queried a year earlier and no one had got back to us. Then on 5th November 2014 the THP issued a claim form in the county court against us for the period Oct2013-2014. We have filed an acknowledgement of service form intending to defend the claim and have also contested jurisdiction. Advise is required for our defence please. Can the contract be rescinded as they did not act in good faith by failing to disclose all material facts ie the 5year contract and induced her to sign it because of the reduced cost, is it voidable as she lacked authority to sign a 5 year contract. It may also be worth mentioning that every year the telecom maintenance company have visited the company once in the year to warrant their invoice. During the last year Oct 2013-2014 they have not been out to us once to maintain anything. I believe they think we contracted to another telecoms provider, but this is not the case as from Oct 2013 we were waiting to hear back from them, and as we did not here from them we decided not to renew the telecoms provider at all, deciding to pay for repairs if and when required. Looking at the terms of the contract whilst it provides for curative maintenance to be at our request, they have in previous years always contacted us. We believe they have acted in bad faith, so it is a matter of principle, but would rather pay up rather than receive a CCJ.Advise please.
Thank you for your question. My name is ***** ***** I will try to help with this.
Are you asking if you are liable?
Customer: replied 3 years ago.

Yes, I believe I am.

Has this person signed contracts for the company before?
She was an accounts manager?
Customer: replied 3 years ago.

Yes this person has signed contracts before, but only after full discussion and approval of a Director.

In 2008 she did sign a contract with Matrix the telecoms maintenance company,after discussion with me,but I resigned the contract in 2009 with them but backdated to 2008, voiding the contract she had signed in 2008.

In 2012 there were never any negotiations with Matrix nor me regarding renewing the contract .In 2008 and 2009 I had been part of the negotiation process. In 2012 Matrix did not contact me, Ashleigh contacted them about the increased invoice, which they said they would reduce, but it was never mentioned nor discussed that it would be reduced on the understanding that a new 5 year contract was signed.In effect she signed the contract believing it was to reduce the invoice not commit to another term.

Ashleigh runs the accounts department but she does not have the final say on major decisions. She is not a signatory on the bank account.

If this person signed a contract before with Matrix, then Matrix would be entitled to rely on implied authority unless they had been told specifically that the person that signed previous contracts were no longer eligible or had authority to sign new contracts. To agree to a contract, people don't have to be a signatory on the bank account. This is extremely common particularly in large companies.
Unfortunately, with a commercial business to business agreement, if someone has signed it they are deemed to be bound by it even if they hadn't read it or understood it.
If you simply cancel the contract and the court finds that the company could rely on implied authority they are not entitled to the full contract value because they have not provided the service but they would be entitled to compensation in respect of their lack of profit for the breach of contract
You should be aware that if they win in court then they will seek costs against you.
Your other point will fail as well. If the contract was there for her to read and she did not then that is not down to them.
I am sorry but I have to give you truthful information.
Can I clarify anything for you?
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