Business without end

‘Business without end’ – article by Christine Oxenburgh, Dispute Resolution Partner

I often get asked what happens when a fixed term contract comes to an end and my client carries on doing business with the business on the other side. Most fixed term contracts have built into them what happens if the parties want to terminate and they are governed by those terms. However, if everything spills over after the end date everything is up for grabs.

I have had to advise several clients who allowed the contract to roll over that they are stuck with paying another two or three years’ service charges to whoever looks after their photocopier or phones. That is never a happy moment.

If there is no provision for what happens next or if it is not inferred from the wording of the first contract, the most likely outcome is that the extension can be terminated on reasonable notice. What is reasonable depends on what service is being provided.

An important issue comes up if you are the supplier, you have carried on supplying and suddenly your customer tells you that they do not want anything with immediate effect. You will be stuck in the position where you have to argue that you are entitled to reasonable notice. The last thing a business needs is an argument with a customer on whom it has been depending on for its turnover.

What to do

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