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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 75960
Experience:  Qualified Solicitor
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A business contract we entered into ended on 30/09/2021.

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A business contract we entered into ended on 30/09/2021. However, in the clauses the contract auto-renewals at the end of the contract unless written notification is given before the contract period ends. But we did not receive any reminder of this, and unfortunately missed the deadline. Do we have a re-course about it being an unfair contract?
JA: Where are you? It matters because laws vary by location.
Customer: England
JA: What steps have you taken so far?
Customer: We cancelled the direct debit and have been in discussion with the company, who have offered us a discount on a further 12 months, or to pay 75% of the yearly cost
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: I don't think so. The service has been very bad.

Hello, I’m Ben. It’s my pleasure to assist you today. I may also ask for some preliminary information to help me determine the legal position.

Please copy and paste the relevant clause/s on here

Customer: replied 9 days ago.
clause 7

OK I understand and thank you for providing this information. Please leave it with me and I will get back to you with my answer as soon as I can, usually the same day. The system will notify you when this happens. Please do not reply in the meantime as this may unnecessarily delay my response. Many thanks.

Ben Jones and other Law Specialists are ready to help you

Many thanks for your patience, I am pleased to be able to continue assisting with your query now. First of all, I am sorry to hear about this situation and any associated issues.

Whilst private consumers get certain protection against auto-renewing contracts, unfortunately the same does not apply to business-to-business transactions.

It is generally assumed that one business is on equal footing with the other business, which they are dealing with and that they are able to read and understand a contract to ensure that they know what they are signing up to. Therefore, as long as the customer has been given the terms under which they were entering into the contract, they will be bound by them, including any clauses dealing with an automatic renewal.

If the required cancellation timeframes or notice requirements have not been complied with, the whole contract could auto-renew for another term, which could sometimes be for another few years. The provider would not have been obliged to issue a reminder, as long as they had issued the auto-renewal terms at the start of the contract. It is for the customer to ensure that they comply with any notice provisions if they are looking to cancel the contract and prevent it from automatically renewing.

If the contract has already auto-renewed and the customer now reneges on it, the other party could potentially make a claim for damages for breach of contract. However, they are not entitled to the full amount for their services payable until the end of the contract. They are entitled to compensation/damages which is their loss of profit, 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. For example, the services cost £10,000 annually, which the customer would have been expected to pay, yet the provider only made £3,000 profit from this – the losses are £3,000, not the higher £10,000.

If the provider is not willing to allow a cancellation outside of the cancellation provisions, and requires the customer to honour the new contractual term, it is still possible to try and cancel the contract. This could be done by sending payment to cover some of their losses and state that it is made ‘in full and final settlement’ of any contractual obligations owed under this contract. If they accept such payment, without challenging it within a reasonable time, it can be argued that they cannot claim further as they have already accepted a full and final settlement for the contract.

If they reject it and wish to continue pursuing the matter further, there is nothing stopping them from doing so. However, they would have to justify that what they are claiming for is fair and reasonable and, as mentioned, that will almost certainly be a much lesser amount than the full fees you would have paid for taking out their services.

Hopefully, I have answered your query in a way that is simple and easy to understand. If anything remains unclear, I will be more than happy to clarify it for you. In the meantime, thank you once again for using our services.

I trust that everything has now been dealt with to your satisfaction and your original question has been resolved. If you have any further queries about it, please do not hesitate to get back to me on here. In the meantime, I wish you all the best.