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we are an IT support company who have contracts with our clients.

We have a client who...
we are an IT support company who have contracts with our clients. We have a client who has been with us for 3 months, they pay their support quarterly and the 2nd payment was due on the 2nd July which they say they will pay by DD on the 17th July. Over the past 2 weeks they have been questioning what we are doing and the MD is saying that we are not getting back to them, replying to emails and that are staff are not providing good service. This is simply not the case and we have evidence of email replies etc. The MD is now saying that one member of our staff called another member of our staff a derogatory name, another member of our staff came into their office and threw things across the table and another member of our staff said they weren't going to do something for them as they didn't want to. These are all lies. We think that they may be looking to not pay their support invoice and are making things up so they can complain.

We have excellent service levels, happy clients and happy staff (who all get on with each other and would not call each other names). As they haven't paid their support invoice we have today suspended service under our agreement terms and have said that clearly he has an issue with our service and that we would be happy to accept his termination and feel that there is not a harmonious business partnership.

We don't however have anything in our contract that allows us to cancel the contract for abuse of our staff etc which this is as he is saying things that have not happened and therefore we do not want a business relationship with them now and will happily walk away and they do not have to pay for any further service. Are we covered under the laws of England in any way, as if they decide to pay the invoice we don't want to continue servicing them due to their constant lies and defamation.
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7/11/2013
Ben Jones
Ben Jones, UK Lawyer
Category: UK Law
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Ben Jones :

Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. What are the terms of the contract governing termination in general?

Customer:

Hi Ben12. Termination


The Contract may be terminated:-


12.1 Forthwith by the Company if the Customer fails to pay the Maintenance Charge or any other charges due in accordance with these Conditions within 7 (seven) days of the due date therefore;


12.2 Forthwith by either party if the other commits any material breach of these conditions (other than one falling within


Clause 12.1 above) and which (in the case of a breach capable of being remedied) shall not have been remedied within 30 (thirty) days of the written request by the other party to remedy the same; Such written request to be sent by recorded delivery within 21 days of the date when the breach was alleged to have been committed. For the avoidance of doubt it is the senders responsibility to ensure that any such written notice is received by the recipient.


12.3 Forthwith by either party if the other shall convene a meeting of its creditors or if a proposal shall be made for a voluntary arrangement within Part 1 of the Insolvency Act 1986 or a proposal for any other composition scheme or arrangement with (or assignment for the benefit of) its creditors or if the other shall be unable to pay its debts within the meaning of Section 123 of the Insolvency Act 1986 or if a Trustee Receiver Administrative Receiver or similar Officer is appointed in respect of all or any part of the business or assets of the other party or if a petition is presented or a meeting is convened for the purposes of considering a resolution or other steps are taken for the winding up of the other party or for the making of an Administration Order (otherwise than for the purpose of amalgamation or reconstruction).


12.4 Any termination of the Contract pursuant to this Clause 13 shall be without prejudice to any other rights or remedies a party may be entitled to hereunder or at law and shall not affect any accrued rights or liabilities of either party nor the coming into or continuance in force of any provision hereof which is expressly or by implication intended to come into or continue in force on or after such termination.

Customer:

We also have this clause


15.5 This Agreement shall be made in and shall be governed by the laws of England. Any dispute shall be submitted to the sole jurisdiction of the English courts.

Ben Jones :

It appears that the termination clause in your contract deals with a couple of possible ways of terminating your services, which would be relevant to this situation. One is the other side's failure to pay you the fees due within 7 days from the date on which they become due. These fees are already overdue by 7 days and as such the condition to terminate the contract has already been met. As such, if you were to terminate the contract now, before they have a chance to pay these fees, you will be acting within the terms of the contract.


 


The other example when you can terminate the contract is for a material breach of its terms and conditions, although that specifically excludes the initial clause dealt with above so even though other breaches will need to be given a chance to be remedied, there is nothing to suggest that this is also the case for a failure to pay the fees.

Customer:

The invoice is overdue and the payment date and due date were listed on the invoice. The situation is that I emailed to chase the payment after the 2nd July and they replied saying 'This was sent up on standing order from the first payment we made, I have checked the date and it will be the 19thof each month.' I replied saying 'OK thanks for letting me know'. At the time we didn't have any issues so did not want to get heavy as such and would have been willing to wait for the payment so not to break down the business relationship for a couple of weeks. Can they argue that I agreed to the new payment date of the 19th by replying ok, we do have the following clause however, and I am not a director of the company. 'These terms and conditions can only be altered by written agreement from Technical Drive, authorised by one of The Company’s Directors. No other amendment agreed verbally or otherwise will be accepted as an amendment to these terms and conditions.'

Ben Jones :

There is an argument that by acknowledging the delay and advising them that a delayed payment is acceptable, that you have waived your rights to rely on that clause. Whilst I understand that the terms may only be altered by a director, there is a legal principle of apparent authority where even if a party who did not have the authority to do something if the party that relied on this reasonably believed them to have authority, all parties will be bound by these actions.


 

Ben Jones
Ben Jones, UK Lawyer
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