As soon as you start a new business, you are suddenly on every business supplier’s radar. Tempting ‘offers’: HR, IT, telephones, photocopiers, printers, telephones, broadband, and a myriad of other subscription/leasing/pay monthly type services and equipment. Things that can be of huge help to your business and its success. However, do you actually look at the ‘small print’ of these offers? Does the supplier even let you see them? Do so at your peril, because all business supplier contracts are not equal…
The Good – A ‘good’ contract and sales process will include the following:
- Transparency on pricing and term length.
- A commercially viable term, eg: 12 or 24 months.
- The ability to terminate on commercially reasonable terms, without hidden penalties.
- Fair valuation of equipment if on hire purchase or on a leasing arrangement.
- Include EVERYTHING that the salesperson promises.
- Include the full set of the supplier’s standard Ts & Cs, and the supplier will allow you time to read and take advice on their contents before you sign.
The Bad – A ‘bad’ contract or sales process may:
- ‘Hide’ or ‘gloss over’ the Ts and Cs, or the salesperson tells you they are ‘standard’ (sorry, but there’s actually no such thing!) and the deal is as they’ve described it.
- Have a longer term.
- Have a high termination payment if you leave early, with only a small discount for early payment.
- Make promises pre-signing which are not included in the contract in the same way they describe (misrepresentation).
- Hidden auto-renewals.
The Ugly – A downright ‘ugly’ contract or sales process may:
- Not include a copy of any Ts and Cs, and say that in signing you agree you have seen them/they apply.
- Have a commercially unviable term, such as (around) 5 years or more.
- Include a hidden/undisclosed termination payment equal to all of the payments for the rest of the contract, payable in full, if you terminate early.
- Include you also entering into a finance agreement with a hire purchase or lease finance company.
- The finance arrangement includes such an overly inflated valuation of the equipment that in some instances you will be paying sometimes 7 times (or more) the actual value of the equipment being leased or purchased.
- Promise ‘free’ upgrades which actually tie you in to a new lengthy term.
You may think that only the gullible would enter into ‘ugly’ contracts. However if you have a sudden crisis in your business and an unscrupulous supplier is in the right place at the right time (for them), it is all too easy to sign up to something to get an instant fix, not realising that you’re in fact being tied into an expensive subscription for years to come.
Generally speaking, the law will not intervene to change a ‘poor bargain’, eg: you are paying too much, for too long. It is up to you to read ‘small print’, and to ask questions before signing if you are unsure.
The good news?!
In the case of some bad and ugly contracts, I can help you to overturn unenforceable or unconscionable terms, and to exit the contract pain-free. Take a look at your supplier contracts now and get in touch if there’s anything that concerns you. Telecoms providers in particular have to comply with OFCOM Regulations which include obligations of fairness and transparency.
Of course, you may not have any bad or ugly contracts (because there are, of course, many fair and reasonable suppliers out there). Not sure? I also offer fixed fee packages from £500 + VAT to review all of your contracts for you and flag any problem areas.
Do not hesitate to contact me for a free chat: 01273 284008 or karen.blakesley@cognitivelaw.co.uk