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Fixed Term ContractsBack

“I have just checked the cost of my current waste management contract and want to cancel. I have contacted my supplier who has stated that I can’t cancel as I have signed a fixed term contract, what can I do.” 

Fixed term contracts are not uncommon in the Motor Industry. There are a number of benefits to them and when used wisely they work well. Unfortunately, they are open to abuse by suppliers who are ambiguous with the terms or misunderstanding where a business does not fully understand all the terms they have agreed to.

You will only have entered into a fixed term contract if this has been expressly agreed between the parties. The first thing to do would be to review the terms and conditions provided at the time of sale. These are the rule book for the dispute and where you have actually signed a copy, these will be binding.  As a business you should never sign a contract without reading and understanding the terms.

Contractual terms can also be sent electronically. If these have been received with the invoice and you go on to pay the amount due a court is likely to assume that you have read and understood the terms and intend to be bound by them as if they have been signed.

When terms are provided is also very important. They must be provided at or prior to the contract becoming binding. Some suppliers will try and incorporate terms by reference to their website. It is much more difficult to assess how a court will interpret these. The stage at which they are provided, and the conduct of the companies concerned will affect the outcome. However, the starting point is that where terms have not actually been provided prior to the contract they will not be binding.

Be aware that standard terms can be amended by agreement and can change over time. Once you have found the terms check to see whether you have expressly negotiated something different on the face of the contract particularly with regards to the length of the contract etc….

Even if there is a contractually binding fixed term you may still be able to cancel where the supplier has committed a sufficiently serious breach of contract. However, to do so you must move quickly as the longer you allow a breach to occur the less likely that you can cancel. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

Paul Carroll, Solicitor, Motor Industry Legal Services

Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.


Posted by Sue Robinson on 15/12/2017