Unfair consumer term??

[SMP1704]

I could do with a bit of advice.  This is work related......

My predecessor signed an agreement for 300 user licenses for some e-learning, which has never been used.  I received a phone call in July asking if I wanted to continue (£5k) and I politely declined.  I then received an invoice In August, so I phoned and emailed to explain that we would not be extending the agreement.  I then receive a letter from a firm of debt collectors demanding payment plus expenses.

It turns out that clause 7 of the agreement indicates that this is a renewing agreement unless the customer provides a written termination before the end of the initial period.

My view is that what I assumed to be a sales call in July should have made me aware of the need for a written termination notice when I made my intentions clear.  I feel I have been tricked in to something I don't want and could certainly use that £5k more effectively.

I have no intention of paying this but I would like to know if I have the law on my side - what do you think?

TIA

[SMP1704]

[lincsyokel2]

ohhh tricky one   ;D


When you signed the contract in the first place, you needed to note the small print.  Unfair Contract Terms covers things which are wholly unreasonable - for example, clampers trying to charge you £500 to get your vehicle back. occording to the OFT

A standard term is unfair if it creates a significant imbalance in the parties' rights and obligations under the contract, to the detriment of the consumer, contrary to the requirement of good faith.

There was clearly a clause saying you had to provide a written termination. You provided a verbal termination, but that is not enough for clause 7, and they ar enot obliged to remind you of your contractual obligation. But you COULD argue 'good faith' says if you havent taken any services for the second year, its not very sporting to insist you pay for it.

However, according to The Consumer Protection from Unfair Trading Regulations 2008, some clauses are per se unfair:

paragraph 1(d) of Schedule 2
For example, in the event of an order being  cancelled no refunds can be given.  When a contract is cancelled consumers should not generally end up paying for something they have not received. This is especially true where the contract is ended by the supplier. Where the consumer causes the cancellation, prepayments should not be retained beyond what is needed to cover losses and costs which the business suffers as a direct result, and cannot reasonably reduce by, for instance, selling to someone else.

Also

Unfair cancellation terms - paragraphs 1(f), (g), and (h) of Schedule 2

For example:

* we reserve the right to cancel any order at any time by refunding all monies paid.
* This contract is not subject to cancellation by the customer.
* After expiry of the initial term, three months notice of cancellation is required.  

The law generally makes each party continue with a contract unless the other is in serious default. Wide cancellation rights for suppliers are liable to be considered unfair unless consumers have equal freedom to opt out of the agreement. A term which in effect means the supplier can cancel to suit its own financial advantage, or for trivial reasons, is open to particular objection if the consumer is likely to suffer loss or inconvenience. If the supplier can cancel without notice, except on serious grounds, there is also potential unfairness.

What rights do THEY have to cancel? Are  there rights more than yours ?

As for the debt collectors, next time tell them you have no contract with them and until the debt is proven in court, no debt as such exists, and as such you will only talk to the other party.. Debt collectors cannot act without a court order. At the moment all you have is a contractual dispute with the other party, there is no court ruling, and so tell them if they attempt to trespass on your property to talk to you uninvited you'll set the dogs on them and call the police (srsly), as you will if they continue to harass you.

I think you need to talk to a contract law solicitor, unless you fancy scanning it in and posting it here, with all the personal identifying information removed.

[Unwashed]

Consumer protection legislation, such as the Unfair Terms in Consumer Contracts Regulations 1999 protect consumers, business-to-business contracts are not regulated.  Sorry.

[lincsyokel2]

hmm good point. Unless you can find a way to wriggle out they may have you contractually i unless hes a one man business ?

IU still think its needs a good contract solicitor to have a look.

[Unwashed]

hmm good point. Unless you can find a way to wriggle out they may have you contractually i unless hes a one man business ?

A one-man-business is still a business, but for the consumer protection legislation to kick in the buyer needs to be acting domestically, and SMP1704 is commercial.

[SMP1704]

Thanks chaps, back to the drawing board then or rather pass it on to the legal team.