Termination of IT Services

[akj501]

Hi All,

I need a bit of advice on how to proceed with a difficult matter. We have a customer we have worked with for the last 2 years, over time they have become very difficult to work with. The customer is constantly late with payment (up to 3 months) and as it stands they owe us 2 month worth of payment. We want to give notice of termination in the near future. The problem we have is the contract we sent never got signed. In the contract it states either party has to give up to 30 days notice, we intend on giving 30 days notice. The customer also has monthly services which we provide such as a vps server etc. My questions are:

1. If we wanted to suspend the monthly services which would disrupt there business - by law how much notice do we have to give the customer? - We are thinking 5 days then suspending services if no payment is made for what we are owed

2. Can we stipulate we want to be paid in advanced for the remaining month so they can offboard to another provider? We want to do this so we don't end up out of pocket once we have assisted them in moving

3. When sending the termination letter do we be honest and say we are not happy with the relationship and/or use payment as the final factor?

Any help would be grand

[R0b]

Hello

An unsigned contract could be legally binding on the parties. If the parties have provided and received services in accordance with the terms of the unsigned contract, then the contract is likely to be deeded binding virtue of the parties' conduct even if the formalities have not been concluded.

If you are confident that the contract has been performed by both sides according to the terms of the unsigned contract, then you may wish to consider exercising your rights and/or termination in accordance with the contract. I would expect the customer to say the contract was not signed as their first line of defence but if you then decided to do something outside of the contract, the customer could then turn that against you and say that what you've done is contrary to the contract terms.

Playing devil's advocate and assuming the contract isn't binding, then notice of termination would need to be 'reasonable' and I'm afraid that's about as vague as it can get because ti depends on the specific facts of each case. In your case, one month would seem reasonable given that the contract length has been relatively short but if you want to be safe you could give 60 days' notice.

There is no obligation to require you to explain termination but where there has been a breach of contract, it is good practice to explain the reason for termination with reference to the contract terms you are relying on. This is because the other side might argue that you wrongfully terminated the contract if you simply said you are terminating. However, if you have a right to terminate for convenience, you can keep as simple as saying "We are writing to notify you of our intention to terminate the contract. In accordance with Clause X, we are required to give you 30 days' notice. Accordingly, we calculate that the contract will terminate on XX/XX/XXXX."

[Manxman]

Are you absolutely sure the contract says "up to 30 days notice" and not "at least 30 days notice"? Up to includes every number of days from zero through one etc and up to 30. Doesn't sound right to me as most stated notice periods are minima not maxima.

[Milupa]

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