Mandatory contract renewal and 3 months cancellation notice

[tsugi]

Here's the deal:

 

I bought accounting software. All good. I found out I only got updates by taking out a service agreement. I did that (around £300). I then got an invoice for this year coming. I contacted them and said I didn't wish to continue with the service agreement, as the price didn't really cover small updates that would be free on other applications, and that I no longer needed. I was very polite!

 

I got a reply (very polite and nice) saying that the agreement renewal was mandatory, was done in advance and needed 3 months written notice to cancel it.

 

This is indeed written in the invoice (I missed it).

 

However - I'd have thought that regardless of the T&C, consumers' rights would take precedence, and

 

1) An agreement renewal can't be mandatory, as it's a renewal, and both sides must agree. It can be automatic unless stated otherwise, but not mandatory. (am I right or not?)

 

2) I can see why I'd need to give three months notice to cancel mid-agreement, but the point of renewing and agreement, is that (as above) it's an AGREEMENT that needs to be RENEWED. A consumer can surely say - at the point of renewal - I no longer want this and do not wish to renew?

 

All kind advice accepted.

[tsugi]

Hi Coniff,

 

No - Mamut software: their "AccountEdge" app

[Conniff]

Ok, thanks, have deleted that as don't want to bring them into disrepute.

 

This sounds a lot like the Gyms terms and conditions, will put it through to someone who might have more knowledge.

[tsugi]

Thanks much

[slick132]

Hi Tsugi - looking in as requested.

 

Depending on how you signed up to the service, the Consumer Protection (Distance Selling) Regulations 2000 may give you some help - http://www.google.com/url?q=http://www.legislation.gov.uk/uksi/2000/2334/contents/made&sa=U&ei=4a7WTpe9MZPY8QOq162nAg&ved=0CAQQFjAA&client=internal-uds-cse&usg=AFQjCNFUUvpsyBnwbc_gWlfwukuV3FcwOw

 

If you signed up online, the Regs set out what must be sent to you for the contract to be valid. Sections 7 to 12 may be useful.

 

I agree with what you say in points 1 and 2 above. However, what matters is what you agreed to do initially. The terms and conditions should really confirm this. In particular, what was the initial minimum contract period when you signed up.

 

Speaking generally, if a contract or agreement has run for a year or more, I don't see that you are obliged to renew for another year. Nor do I agree that you must give 3 month's notice to cancel before renewal, or the renewal is mandatory.

 

Take the example this year of the ruling given by Mr Justice Kitchin in the case of the OFT -v- Ashbourne Management Services Ltd. - http://www.consumeractiongroup.co.uk/forum/showthread.php?289465-Office-of-Fair-Trading-v-Ashbourne-Management-Services-9th.March-2011

 

It was the judges opinion that a contract which initially tied you in for more than 12 months was possibly unfair unless there were circumstances in which you could cancel.

 

So, the way ahead is:-

 

1. Let us know the initial minimum contract period.

 

2. See if there's help for you in the DP (Distance Selling) Regs 2000. Is there anything they've not done which leaves the contract invalid.

 

3. Have a look at the Judge's ruling (or the OFT's summary of it) which you could reasonably apply to your own case.

 

[Kraken1]

I would have thought that an agreement to agree, which this seems to be is voidable in law. You can't have an agreement to agree in contract law. I'd suggest that they can therefore 'do one'. That said, this is common and so if this is a valid view then other contracts must have been challenged on this basis before.

 

There is also a DSR angle that suggests that this is a new contract and was therefore entered into at a distance and is therefore cancellable.

[tsugi]

Hi,

 

Thanks for the advice.

 

I had a hunt online - nothing was ever sent or signed. In a sub-sub page of the product service description (NOT the product description) it says if you instal the app, you are bound by the User Agreement, which is available as a PDF. The only mention of time is this:

 

"4. Duration and renewal of the Mamut Service Agreement

 

From the date on which you enter into a Mamut Service Agreement it will, as a main rule, remain in effect for one year, calculated from the invoice date, and be renewed automatically for one year at a time, unless otherwise agreed.

 

Please note that the Mamut Service Agreement will in respect of certain software licenses remain in effect from the invoice date until the first yearend, and then be renewed automatically by additional agreement terms with a duration of one calendar year at a time, unless otherwise agreed."

 

So as far as I can see - they are defining the contract as needing renewal after a year. At that point, it being a contract renewal, I should surely have the right to simply NOT renew. I shouldn't have to give three months notice that I do not wish to RENEW something which is an agreement. Nor should they be able to bill me for their renewing the agreement without my actually acquiescing - their saying it is a mandatory renewal is a tad arbitrary. Continuing with the bill and adding on costs for a renewal of an agreement that does not (in their view) need my agreement also seems at odds with the Distance Selling regs.

 

Any thoughts based on the clause above?

[Kraken1]

your analysis seems reasonable to me, subject to them renewing and you affirming the contract somehow.

[slick132]

Yes, I think you have reasonable grounds to contest the renewal fees and the basis on which they are trying to charge them.

 

[tsugi]

Thanks for all the advice, and thanks for your thoughts, Kraken1 & Slick 132

[tsugi]

Some correspondence -

 

From me

Dear George,

 

Thank you for your email, and for cancelling my service agreement. What is meant by the current invoice remaining? I'm assuming that it does not mean that the invoice is to be paid, as I haven't actually used any of your service facilities outwith the previous year, for which I of course paid.

 

In terms of a mandatory renewal: I'm sure the meaning is automatic rather than mandatory - as the whole point of a limited term contract is that it is - by definition - limited, and renewal is at the agreement of both parties; it would be a funny old world if new contracts could be enforced by just one side! In terms of both three months notice being required, this would also be odd, as the point of renewal would be so far off as to necessitate some kind of prescience on the part of whichever party might not wish to renew; who could possibly know that a quarter of a year in advance?

 

I'm sure I have the wrong end of the stick, but could you please confirm that the invoice is indeed for information only, and does not require action on my part?

 

Thanks so much for your time and patience,

 

David

From them

Dear David,

Thank you for your email.

Unfortunately the invoice remains to be paid as you did not cancel within 3 months which is our Mamut Policy & as per our terms & conditions which I also emailed you plus where it is stated in the original invoice from last year (also emailed to you).

 

I am sorry this is not what you want to hear but these are Mamuts terms.

 

From me

Dear George,

 

Thank you for your email. It is indeed unfortunate! It seems a tad unfair that I should be charged for something I haven't used.

 

I bought the software without the service agreement. When I tried to find updates, I discovered that I could only get updates with the service agreement. Leaving aside the fact that, while I am all for paying extra for software service and support, charging for non-major upgrades sets Mamut in a relatively small club in the world of software suppliers; most software companies charge only for major updates, and only when they arrive. Your charge seems to be "in case" an upgrade occurs.

 

Anyway - I wanted the update, so I phoned the number on the service page, and bought the service agreement. At no point was it mentioned that renewal was automatic (let alone compulsory). I see now that the service is now listed as mandatory. This wasn't the case when I bought the software, as I would certainly have had second thoughts about buying a product where the initial charge still did not mean one could use the product!

 

I paid at the time, and used it to update. I haven't had cause to use it for support, or to update subsequently. Nor was I even aware that my agreement was ongoing.

 

My problem, on an ethical level is this:

 

1. Having bought the software, I am being further charged mandatorily to use it.

2. I am being charged for [updates and support] I have not used.

3. The idea that an agreement can have mandatory renewal is counter-intuitive: if it is an agreement, then I would - by definition - need to agree to the renewal. I can see where automatic renewal might occur, but not compulsory.

4. I can see where three months notice would be necessary during the course of a fixed-term agreement, but once the agreement is due for renewal, the agreement - by definition - is reaching its conclusion, and therefore notice should not be necessary.

 

This seems to have been brought about by my buying the software prior to the mandatory service agreement, and purchasing [what I thought was] a year's service support subsequently. I apologise for any confusion this has caused, and I would greatly appreciate it if you could see your way to cancelling the current invoice.

 

All the best,

 

David

[slick132]

Hi Tsugi,

 

Nice letters !

 

If they persist with their view, your next response should refer to :-

 

1. The case of OFT -v- Asbourne Mgt Svs Ltd and to Mr Justice Kitchin's view that a contract which ties consumers in for more than 12 months was deemed unfair. This was a High Court ruling which therefore sets legal precedence.

 

2. The change of the terms of business prior to the renewal date which you've already mentioned. Clearly any change in such terms would need your agreement or you have the right to withdraw from your contract and/or decide not to renew.

 

3. Any failings on their part regarding the Consumer Protection (Distance Selling) Regs 2000.

 

[tsugi]

Thanks slick132,

 

This is their reply:

 

Dear David,

Thank you for your email but the invoice remains & cannot be cancelled.

 

When you purchased the software from myself on 9th December 2010, I explained the yearly service agreement & everything you receive with it in that telephone conversation & so there is no uncertainty as to what you 100% receive on an annual basis with this service agreement, then please see the below:

 

• Full & unlimited support (telephone, email & online) between the hours of 9am to 4pm Monday to Friday

• Any / all updates or upgrades within the market are included such as new VAT or EU Laws

• You are allocated a personal / dedicated account manager for all queries which is myself in your case

• Minimum of one free software version upgrade per year & any other change in the market

• Use of the software of an annual basis including the apple applications available for unlimited download

 

Please again see the invoice you received at the time that also states the same terms you question:

 

Our yearly service agreement has always been mandatory & is the same for all 700,000 current Mamut Customers & provides an upgrade every year around March / April. It is not as you say “in case” an upgrades occur.

 

Hmmm

 

Thoughts?

[Kraken1]

"Dear Sir,

 

You will be aware that an agreement to agree is void in English law and therefore unenforceable. This is aside from other issues relating to the Distance Selling Regulations which, likewise, give grounds to cancel. I am happy for a court to judge this matter. In the interim I would therefore, and with regret, refer you to the reported response coined in the case of Arkell v Pressdram (1971) which I believe fully outlines my response to any claim you may make.

 

Yours sincerely

 

etc"

Edited December 3, 2011 by Kraken1

[slick132]

Not having heard of this before, I have just looked up the case referred to above.

 

Still laughing about it now !!

 

I think, Tsugi, the time for polite exchanges is over.

 

[tsugi]

Not having heard of this before, I have just looked up the case referred to above.

 

Still laughing about it now !!

 

I think, Tsugi, the time for polite exchanges is over.

 

Thank you so much kraken and slick (Kraken and Slick: a new crime-busting series?)

 

I shall send Kraken's message, and keep you appraised.

[Kraken1]

you might want to dial back on the pressdram stuff though, as funny as it is. In the cold light of morning I'm of the view that it might not be the best potential response...

[slick132]

Good idea. BORING, but still a good idea.

 

[tsugi]

Latest sent by me (I've been abroad - as opposed to "a broad")

 

Dear George and Accounts department:

 

As you are aware, I have queried the situation whereby an ongoing agreement is stipulated as a mandatory occurrence. I have communicated this disagreement to you several times, and asked that you void the invoice for the Service Agreement for the year which I neither requested nor used. To be more direct: I do not wish to pay the invoice number as above. You will be aware that an agreement to agree is void in English law and therefore unenforceable. This is aside from other issues relating to the Distance Selling Regulations which, likewise, give grounds to cancel.

 

I hope you understand,

 

All the best,

 

David

 

------------

We shall see.

[tsugi]

The reply

 

Good Evening David,

Thank you for your email which I received today.

 

We have indeed been in contact before but as mentioned before & as per our terms & conditions, the invoice remains to be paid.

 

Best regards,

 

-------

 

Thoughts? Say nothing? Repeat email?

[Kraken1]

'Thank you for your message. As you may be aware, just because something is in your terms and conditions does not mean that it is enforceable, as was found in both the Foxtons and Asbourne Gym cases. I will vigorously defend any claim you may seek to bring. I am happy to accept service of any claims at (my address).'

 

By the way, not saying that you gave a good claim, as we don't have all the details, but based on the limited info you have given, it is perhaps slightly better than average chance.

[slick132]

I'd reply to them saying:-

 

As you have failed to address the substantive issue, namely that you have no basis in law to enforce any contract or payment, I now consider the matter to be closed.

 

[tsugi]

Again - thanks much.

 

d

[tsugi]

Interesting event - and one that makes everything moot. The software won't work without the service agreement, so it's £150 for the software, but a further £110 per annum to use it. I now can't access my accounts to print off last year's. I may well have to pay to avoid inputting a year of accounts, but then again - I may just be pig-headed and input the whole lot again in another application!

[Kraken1]

that seems a bit odd. was it clear that that would be the case when you bought it?