Auto renewed contract, is this legal/enforceable??

Auto renewed contract, is this legal/enforceable??

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Hello,

Hopefully some bright spark out there can help me. We have a service that we use and want to switch to an alternative provider for online advertising.

However, the initial contract had an auto renewal clause and we would have had to give 90 days notice to cancel the contract. This was not picked up when signed and when the contract came up for renewal was not highlighted or communicated in any way giving us a choice .

Now Sage on the other hand we have a similar contract. But they communicated to us our payroll was due for renewal, we now outsource our payroll it so kindly cnacelled the service frtom Sage. if they hadn't they could have locked us in as well,.

It seems unethical the first provider would do this. i'm sure it's legal but how do we break this contract, the alternative solution is significantly cheaper? The original contract was signed by someone no longer working with the business.

Thanks,
Chris Bowen

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By jndavs
21st Nov 2014 14:41

Auto renewal

These clauses are legal and can be enforced but you may have a case to have it set aside under UCTA, to quote the OFT (not law but their opinion carries a lot of weight):

2.7 Automatic rollover or renewal is where consumers sign up to a minimum contract period (usually subject to an early termination charge) that is automatically renewed or continued unless the consumer explicitly tells their provider that they do not want this to happen .This is often seen in insurance or subscription contracts and may be a source of problems.

2.8 Automatic renewal is potentially detrimental to consumers where it results in a decrease in switching e.g. because of the limited 'windows' in which consumers have the opportunity to switch without incurring additional cost. The likelihood of switching may be decreased because of inertia and/or increased switching costs. This raises concerns about potential harm to individual consumers, as well as about potentially dampening competition. Automatic rollover is likely to be most harmful where there are additional problems associated with it , for example:

• it is not disclosed to consumers at the outset, or

• the business uses small print to couple rollover with onerous cancellation, terms and conditions or procedures, or

• the business adopts unduly awkward procedures for cancellation or opt - out (including unduly short periods in which to do so) , or an unduly long minimum contract, or cancellation , period, or

• the business fails to highlight, either at sign - up or at rollover (or both) , that the subsequent tie - in period is on less favourable price or other terms than the first.

2.9 Rollover terms have caused particular concerns in both the energy and telecoms markets, which have been investigated by Ofgem and Ofcom. Ofcom issued a public consultation which led to it amending its rules, the General Conditions of Entitlement, to prohibit rollover contracts in the fixed voice and broadband residential and small business sectors.

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By KrisKros
24th Nov 2014 13:51

Thankyou so much for taking the time to respond!

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