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MILS CASE STUDY – IS A CONTRACT BINDING?Back

Contract“ I recently reviewed my waste management contract and tried to cancel it to be told that I am bound for another year. No-one told me this, is it binding?”

This will depend on the terms of the contract between the parties. For any contract terms to be binding they need to be agreed between the parties. If you have not agreed them they will not be binding.

• Confirm the facts of the case in detail

The first thing to do would be to contact the company concerned and ask for more details. Where possible get them to refer to the specific terms and conditions they will rely on and request confirmation of their position in writing; this can be by email.

• Review the contractual terms

When you have a detailed understanding of the terms being relied on by the other side, you need to review your copy of the terms and conditions and see if they are the same as those quoted.

This is where most businesses are caught out. As you are acting in a business capacity there are less automatic protections. If you have signed any terms and conditions, you will be deemed to have read them, understood them and agreed to be bound by them. In this situation there are still some arguments but they will be difficult and depend on the case.

• What if I have not signed anything

If you have not signed any terms and conditions you should review any delivery notes or invoices presented. If you have received an invoice, quote or delivery note attaching terms and conditions and have chosen to continue with the contract, then the last terms received will be those that are binding.

Next steps

Any action brings with it a risk and a reward. Cancelling a contract risks a liability for fees, but allows the company to look elsewhere for services and reconsider the costs incurred. Even if you are bound by a contract, you are only required to pay if you cannot reach an agreement with the other side and they obtain a court order. If the other side has acted questionably, or the losses sustained are minimal, then you will always have the ability to breach the contract and take a chance on the compensation ordered by a court. This is a high risk strategy and you need to remember you will be liable for court fees and legal costs should you take this course.

Don’t forget to carefully document all conversations and to evidence all telephone calls, emails and letters for future reference. Also, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. 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

Posted by Sue Robinson on 30/01/2015