IGA News

Be Aware - September 2019

Be Aware - September 2019

30 August 2019

Renewing contracts

“I have recently signed an advertising contract which I thought was for 1 year only. I have now been contacted by the company and told it automatically renews if I do not cancel. Is this fair?

Firstly, this is not an uncommon problem. We are seeing more contracts that automatically renew. This can simplify matters for regular contracts such as laundering services, insurance and waste disposal. The problems come when members do not know they will renew until it is too late.

Were you told about the renewal or provided with contractual terms at the beginning of the contract?

It is a basic principle of contract law that only terms incorporated into the contract can apply. If you were specifically told about the renewal then this will apply. However, the terms of any renewal or cancellation process must have been sufficiently clear to be binding.

It becomes trickier where you agree to a contract without signing any terms and conditions. As businesses the courts will assume that you have read and intend to be bound by any terms signed.

What are the cancellation terms?

If the contract has renewed are there sufficiently specific terms to cancel the agreement. If these terms are not sufficiently specific then the court will have to interpret their meaning. Each case will therefore turn on its facts. However, the most likely outcome is that the notice period for cancelation will be the period covered any one invoice. i.e. if you are billed monthly one month, is weekly one week.

What if the terms are unfair?

In some respects, tough. There are significantly less statutory protections in business to business contracts. If you have signed it you will likely be bound by the terms, so read any terms thoroughly.

That said, there is some protections and arguments that may apply. The most likely is under the Unfair Contract Terms Act 1977. Where you are contracting under the other side’s standard contract, section 17 of the act would prevent them from being able to use their standard terms to

“render no performance, or to render a performance substantially different from that which the … customer reasonably expected from the contract;

if it was not fair and reasonable to incorporate the term in the contract.”

You may, where the original contract is sold as one year therefore be able to argue that any clause that entitles the other side to renew automatically would be unfair.

Conclusion

Check all contractual terms before reaching an agreement as prevention is better than cure.

Once signed regularly review contracts to ensure they remain relevant and, where you are unhappy that you are familiar with the steps needed to cancel them. This is particularly important for ongoing contract such as laundry contracts, waste disposal contracts, advertising contracts insurance contracts.

Employer Counterclaims in the Employment Tribunal

The Employment Tribunal is a forum which Employees bring claims against Employers. There is however, one claim an Employer can bring against an Employee in an Employment Tribunal and that is a counterclaim for breach of contract.

Employers can only counterclaim for breach of contract, if the Employee themselves makes a breach of contract claim against the Employer. This can however be a useful tool in the Employer’s armoury, given that there can often be outstanding contractual disputes and monies owed by the Employee, if matters end acrimoniously.

Furthermore, the Employment Tribunal (EAT) in Cortel Telecom Ltd v Shah has recently confirmed that an Employer’s counterclaim can continue and be heard by the Tribunal, even if the Employee has withdrawn their breach of contract claim. The case also serves as a warning to Employees (and their representatives) to think carefully before bringing a contractual claim against their Employer, as once that claim is issued (and the way opened for a counterclaim) then they can’t stop their Employer continuing to pursue them in the Tribunal for the counterclaim.

As always, 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.

What does a “Maybe Fit” Fit Note mean?

“We have an employee who has provided us with a Fit Note saying that she maybe fit for work subject to adjustments. The adjustments being varying the hours of her working day. We are not sure we can accommodate this, so what does it mean, does the company have to agree to these adjustments and, if not, what can we do?”

Where a “Maybe Fit” note is provided by an employee, inevitably it will follow with some form of suggested amendments by the GP. It is not a legal requirement to comply with the GP’s suggestions, however, it would still be prudent to meet with the employee to discuss the adjustments and whether they can be facilitated or not. Where they can be facilitated, then the employee would return to work and have those adjustments put in place. Any such adjustments would only last for the period that the Fit Note covers. For example, if the employee is signed as Maybe Fit for one month, then the adjustments would only be needed for a month. At the end of that period, arguably the employee should then be fully fit to return to their normal duties, unless they go back to their GP and receive a further “Maybe Fit” note. The Fit Note itself would specify whether or not the employee needs to be reassessed by the GP, but in most cases the answer is no.

On the other hand, where the company cannot put in place the suggested adjustments, provided these are for objective reasons (rather than the company seeming to be difficult) then legally the employee would remain on full time sickness absence until they are fully fit to return to their role. Unless there is a contractual sick pay policy in place, the employee therefore would continue to receive statutory sick pay.

In summary, it really depends on what can be agreed between the parties, so if the GP’s suggestions cannot be accommodated to the letter but a variation of them can, provided both the employee and the employer are happy then a return to work potentially could be facilitated albeit with it slightly different amendments.

Business to Business contracts

“I regularly buy and sell vehicles from and to other businesses in England and Wales. I have been told that these are sold as seen and there are no liabilities or ability to claim if there is a fault is that correct?”

It is correct that there are a number of differences between a business to business and a business to consumer transaction. What conditions apply will depend on the agreement between the parties.

In a business to business sale there is no protection at all.

That is not true. Whilst the Consumer Rights Act 2015 (CRA) replaced the Sale of Goods Act 1979 (SOGA) for business to consumer transactions, the SOGA continued to protect business to business transactions. The SOGA contains almost identical protections with regards as described, satisfactory quality and fit for purpose etc… and as such these will also be conditions of a business to business contract.

Where the SOGA differs is that these conditions can be excluded in a business to business transaction, and often are. You therefore have to decide when buying or selling a vehicle whether you wish to exclude the SOGA and where you want to sell vehicles sold as seen etc…that you have an express term within the agreement that exclude them.

The seller can exclude anything they like

That is not true. Whilst the courts are a lot less likely to interfere with the terms of a contract in a business to business transaction, this does not mean that it is the wild west and that anything goes. The Unfair Contract Terms Act 1977 (UCTA) sets a number of contractual clauses that are unenforceable.

  • A business cannot exclude liability for death or personal injury due to their negligence;
  • A business can limit their liability for any damage caused due to their negligence, but only if the term itself is reasonable and sufficiently brought to the other party’s attention;
  • A business can limit their liability for any damage caused due to a misrepresentation on their part but only if the term itself is reasonable and sufficiently brought to the other party’s attention.

What is reasonable will depend on what the court decides is reasonable ‘having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.’

When deciding what is reasonable the court will consider what or ought reasonably to have been known to the parties when the contract was made and will also consider:

  • The strength of the bargaining positions of the parties relative to each other,
  • Whether the customer received an inducement to agree to the term,
  • Whether the customer knew or ought reasonably to have known of the existence and the extent of the term,
  • Where the term excludes or restricts any relevant liability if some condition was not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;

It is important to note that it is for the party seeking to rely on the clause to prove that it is reasonable.

The seller is liable for anything within the first 6 months.

That is not true. This is correct under the CRA where a business contract is with a consumer, but in a business to business contract there is no such assumption. As such it will be for the purchaser to prove that the issue complained of was a fault and was more likely than not present at the time of sale.

If I wasn’t aware of a contractual term within the contract I can’t be bound by it.

That is not true. In a business to business transaction the court is far less likely than in a business to consumer transaction to interfere with the agreement. Where you have been provided with terms and conditions and have signed them the court will assume that you have read, understood and agreed to be bound by them and it will be very difficult to avoid them unless they are deemed unreasonable (see above).

The court is a little more likely to interpret a contract where there is no signature. However, refusing to sign a contract is not a bar to the terms being binding. If you receive terms and conditions and then continue to trade with a company the starting point for a court is that these terms will be binding.

Conclusion

Contractual disputes are complicated and will depend on the nature of the agreement and the extent of any contract. Where position ensures that all terms are in writing and never enter into an agreement without fully understanding the terms, carefully document all conversations and to evidence all telephone calls, emails and letters for future reference.

General Note

Don’t forget, 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 on the direct member helpline or 0845 305 4230 at any stage for advice and assistance as appropriate.