Terminating a Business Service Contract

[e_zee_tiger]

I'm wanting some advice please on serving notice to terminate a service contract as part of a business. The service contract in question is for sanitary and PEST control services and looking at the terms and conditions we are required to 'provide 3 months written notice prior to the contracts end date, by recorded delivery letter'. Now, we have tried to serve notice before on this contract and it has previously rejected on the basis we served notice by email rather than by recorded delivery and the general ethos of the company is to keep customers tied in wherever possible so we were forced to renew the contract.

This time round I will be giving the company as much notice to terminate as possible and have today served notice, some six months in advance. In hindsight, I'm now wondering whether the company would have course to reject this on the basis that I have serviced notice too early, as the Ts&Cs don't state notice to be a 'minimum of 3 months' just '3 months' prior to the contracts end date and I'm aware with some companies (such as Virgin Media) they do not allow you to give notice until exactly 2/3 months prior to the contract end date. Do I therefore need to serve notice precisely 3 months before the contract's end?

It would be difficult to service notice 3 months prior to the end of contract as I will be on maternity leave and want to put things in order now. Does anyone know where I stand legally and whether they may have recourse to reject my early notice? We don't want to pay another penny to this company. Thanks in advance!

[R0b]

Hello

Probably comes down to interpretation and what the parties had intended the clause to mean - can you provide the full wording for us.

It is possible that the reference to "3 months" may infer that you have to give exactly that amount of notice, meaning you would probably have to send your notice next day delivery exactly to arrive with exactly 90 days' notice. If there is ambiguity, you could argue this and where there is more than one way of interpreting the clause, then the clause is construed against the party who drafted it - this is called contra proferentum (google it).

I've seen notices like this before and in most cases, they are negotiated to say something like "not less than 3 months' notice" because the requirement to comply exactly with 90 days notice can be an onerous one for the party wishing to terminate.

It pays to review the contract terms and assuming you signed up to them without actually reading the terms, this is just another bad bargain.

Given that you've already sent the notice, it's probably useless now but what I would have done in your notice letter, is to add some wording to the end and ask them to acknowledge receipt by returning a signed copy of the notice within 14 days. You have some wording at the bottom to say something like "We, [company name] acknowledge receipt of this termination notice in which the contract shall terminate on [date]". That way, if they ever disputed your interpretation, you can argue that by returning the signed copy, they accepted that your interpretation was correct and cannot now go back on their word.

[e_zee_tiger]

Thank you for this advice - it is very helpful. I was hoping to follow up the letter by email and have them confirm the termination date by return but the last time we served notice they went very quiet and 'pretended' to have not seen our numerous chasing emails. If this is the case again then I will re-send the letter adding the additional wording you advise, as I still have ample time to do so.

The precise wording of the Ts&Cs is as follows:

'The agreement cannot be cancelled until the minimum contract period of 5 years has been served. To cancel the contract the customer must provide 3 months written notice prior to the contracts end date, by recorded delivery letter. The contract end date being 5 years from when the equipment was installed. At the end of the initial contract term, the contract will continue on for a further 5 years (extension period) as set out in clause 1 above.'

You are right that this is ambiguous and what it suggests to me that unless we serve notice within the correct time period (however this is construed) then we would be automatically entered into a further 5 year contract, so 10 years in total!!! This seems scandalous to me, especially as its just a basic sanitary and PEST control service!

[R0b]

The company seems to be teeting on the edge of competition law if they are contracting you to 5 years at a time. The Competition and Markets Authority suggest that anything around 5 years or more could be in breach of competition law for comitting that party to an awfully long time and not having the ability to shop elsewhere. It is possible you could report them for breach of competition law if they refuse to let you go - but it is probably better to ensure you comply with the terms than relying on this point.

As I read that clause, I would take it as meaning exactly 3 months' notice otherwise you would expect it to say something like "at least 3 months' written notice", but it is perfectly plausible to think that could be interpreted either way.

Just to give you an idea of how difficult it can be, you might want to read this article which discusses a recent case at Court of Appeal level. The CoA had to decide whether the notice period to be given was exactly 6 months or at least 6 months was needed. In the end it opted for the former interpretation based on the facts of the case - see a key quote from the decision below.

Although Lord Neuberger recognised in Arnold v Britton at [17] that the importance of the language used by the parties to the contract should not be undervalued, what is usually referred to as commercial common sense is relevant to the ascertainment of how matters would have been perceived at the time when the contract was made. In Wood v Capita Insurance Services Ltd the Supreme Court re-affirmed that the construction of a contract is a unitary exercise in which each suggested interpretation is checked against the provisions of the contract and its commercial consequences: see Lord Hodge JSC at [12].

There's no harm in you chasing up the letter to confirm they have received it and agree that the contract will be terminated on X date. Just make sure you keep it in writing for records and evidence reasons. If they disagree or don't respond back to you, it's probably better to be safe and re-serve your notice giving exactly 3 months.