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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 53179
Experience:  Qualified Solicitor
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I was just wondering how enforceable a business contract is

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Hi there, I was just wondering how enforceable a business contract is with a long and complicated set of terms and conditions. the company i have the contract with is saying that the contract is auto renewable after 2 years and that I haven't given them 6 months notice? thanks for any help you can provide.
Brendan

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today.

Were you notified in any way at all, prior to the agreement rolling over?

Customer: replied 8 months ago.
I have had no contact since the original invoice was paid.

OK, thank you for your response and for the phone call request. I am not available to talk at this present time but leave it with me for now and I will review the relevant information and laws and get back to you at the earliest opportunity. There is no need to wait here as you will receive an email when I have responded. Also, please do not respond to this message as it will just push your question to the back of the queue and you may experience unnecessary delays. Thank you.

Ben Jones and other Law Specialists are ready to help you

Hi there, just because something is long and convoluted does not make it unfair or unenfroceable. There are many examples of extremely complex contracts which can easily be legal and enforceable so that in itself is not a measure of whether it is a valid contract or not.

As a business to business contract, the usual consumer laws and protections that individuals get, do not apply. It is assumed that as a business the parties were well informed and able to read a contract given to them, including the small print. So whilst rolling contracts have been banned in some consumer cases, they are still perfectly legal in business relationships, as long as the party who is the customer has been given the terms under which they were entering into the contract (whether in the small print or not).

If the terms of the agreement were provided before accepting the contract, then both parties would be bound by it, including the terms dealing with an automatic renewal after a period of time and if the customer has not given the required cancellation notice. Therefore, trying to cancel it once an auto renewal has taken place as per the terms, can potentially place the customer in breach of contract. There is no obligation on them to have informed the customer of the cancellation obligations or given them notice that you were approaching the cancellation window, as long as these terms were issued at the outset.

So if the customer now reneges on the contract the other party could potentially make a claim for damages. However, they are not entitled to the full amount of their service payable until the end of the contract. They are entitled to compensation/damages which is their loss of profit. So it would be the actual profit they may have made, not the direct cost of services to the customer. This will be less than the fees that would have had to be paid for the full new term.

It is possible to try and cancel the contract and send them a cheque telling them it is in full and final settlement of the fees owed. If they then accept such payment, for example by cashing the cheque, it can be argued that they cannot claim further as they have already accepted a full and final payment for the contract. There is nothing to lose by trying that. If they reject that and wish to continue pursuing the matter further there is nothing stopping them from doing so and even going to court. However, they would have to justify that what they are after is fair and reasonable and as mentioned that will almost certainly be a much reduced amount than what they may be after.

Customer: replied 8 months ago.
Hi Ben,
thanks for your reply. Whilst I can appreciate the terms of the contract obligates us, I am not happy in the delivery of service received from the supplier plus the contract allegedly started on 04/07/16 so the initial 2 years hasn't lapsed as yet and they are sending the renewal invoice and chasing payment 3 months or so early when we haven't reached the renewal date. My question is, if I give notice now, it takes us beyond the 2 year renewal period whereby we are entered into another 2 years as it isn't 6 months before the renewal date. thanks

It is very common for these types of contracts to contain a clause asking for a set notice period before the renewal to cancel. So for example 6 months before the renewal is the latest to give notice to cancel and if you miss it, then you are enrolled again into a new term. This is nothing unusual, as long as you we aware of these terms