The mantrap: Termination Clauses

Hint: if he's smiling and his lips are moving, he's lying. Mr Unscrupulous Copier Dealer has only one interest. His wallet.

And that's why he'll quite happily bankrupt your company to get his hands on your money if, for any reason, you want to or have to terminate the contract early.

Let's say you have an existing service agreement and an existing lease. He may tell you that if you sign with him, he will pay off existing agreements. You'll agree, because he is offering you a better price. He'll tell you that existing service agreements won't be enforced by the outgoing company.

Then you'll get the threatening letters from the outgoing company's lawyers, drawing your attention to the cancellation clauses.

Even though, when you signed the contract, it was for a minimum volume, they will calculate the termination charge based on the average volume over the preceding 6 months, and then multiply it by the months remaining. You will get a huge bill and they WILL press you to pay up.You may be able to settle out of court (call us and we'll give you some ammunition for this) but it will be difficult to wiggle out of the contract because the courts are reluctant to intervene between "consenting adults".

It was because of these clauses, and my frustration at the spinelessness of the OFT, the Courts and the industry's own trade association, that i began this blog.

[My story: I ran a project that resulted in £250,000 of liability in contracts that contained terms that, whilst legal, were grossly unfair. If you want more advice for free call me on 07872 916618]