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JimLawyer
JimLawyer, Solicitor
Category: Law
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Experience:  Senior Associate Solicitor
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I have a business telephone contract which expires in ‘22.

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I have a business telephone contract which expires in ‘22. However, I am no longer running this business and want to use a domestic provider. In these circumstances will I be in breach of contract?
JA: Where are you? It matters because laws vary by location.
Customer: Taunton, Somerset
JA: What steps have you taken so far?
Customer: i have written advising Chess Telecom of my situation. They have replied saying that if I break my contract with them, I will be charged £1009!
JA: Anything else you want the Lawyer to know before I connect you?
Customer: No.

Hi, this is Jim, thank you for the question - I will resolve this for you.

Sorry to hear of the issue. Generally, in business-to-business contracts, you have fewer rights compared to consumers. The terms are binding and there is generally no provision to let you out of the contract if you change your mind for example. The only way out of the contract in this situation would either be to pay the charge, or to argue the contract has been frustrated perhaps due to the pandemic. A frustrated contract is where it is impossible to perform (e.g. a business goes bust due to Covid-19) and as such the contract is therefore set aside and void. There is usually a high bar to prove frustration but with the pandemic, more and more contracts are effected in this way. I am not sure if your business is no longer running due to the pandemic - if that is the case then your best option is to refuse to pay the £1009, argue the contract is frustrated and this is through no fault of your own and ask them to walk away. If your business was not affected and you simply changed your mind, unfortunately you are faced with having to pay the charge. If you do not then they may issue a small claim against you. You could defend it though.

If they reject your argument for frustration of contract and if they sue, you will receive court documents (a response pack) which you must complete and return to the court. It is a tick box exercise for the most part and there is a short section to write a defence which is easy enough though please feel free to come back to this site if you need any more help. A claim will also take 6-12 months to be decided at court. If you lost then you would get 14 days to pay the judgment before the claimant can enforce the order, and 30 days to pay in full before it is registered with credit agencies. The claimant cannot recover legal costs if they win, in a claim under £10K (a small claim), all they can claim are the court fees and interest. If you were unable to pay the full sum owed at that point you can also ask the court to pay by installments (a simple form is sent in, form N245, and a fee of £50 unless you qualify for a fee exemption so if you are on a low income, have low savings or in receipt of benefits then you would qualify).
I can assist you going forwards if it gets to the point they issue a claim.

I hope this helps and answers the question - please feel free to ask me anything else. .

Have a good day,
Jim

Customer: replied 10 days ago.
Thank you Jim. I had a self-catering holiday let business with 2 units. Due to cancellations and refunds etc during the pandemic, I am no longer offering these units and have transferred them to shorthold ASTs. Would this qualify as a frustrated contract?

Yes, my view is that it would - you can certainly argue that and I have uploaded a template letter for you to use which will hopefully help. It does refer to landlords but the terminology can be used in your letter. You just need to say the contract is frustrated due to Covid-19, and as such is void, so nothing to pay. I would hope that would work and they will not bother you again. If they do, I can assist you going forwards if they decide to escalate this.

Hi, I’m just checking to see if the answer helped or if you need me to cover anything else?. I am happy to clarify the answer or address anything else for you.

Many thanks,
Jim

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Customer: replied 9 days ago.
Thanks Jim, I’m very happy with your suggestions. I shall approach the Chess with a letter using these principals. So thank you, that’s all for now.