Trade body issues contract renewal advice for garage owners

IGA shares essential tips and advice for workshops to combat growing problem of automatic contract renewals

Trade body issues contract renewal advice for garage owners
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The Independent Garage Association (IGA) has issued contract renewal advice for members after a reported rise automatic renewals.

The trade body is urging independent garages to check contractual terms before reaching an agreement in a bid to avoid unexpected renewals.

An IGA spokesperson said: “This is not an uncommon problem.

“We are seeing more contracts that automatically renew.

“This can simplify matters for regular contracts such as laundering services, insurance and waste disposal.

“The problems come when members do not know they will renew until it is too late.”

Contract law

According to the IGA, it is a basic principle of contract law that only terms incorporated into a contract can apply.

This will apply to business owners that were specifically told about the renewal.

However, the terms of any renewal or cancellation process must have been sufficiently clear to be binding.

Cancellation terms

Frequently, the notice period for cancelation will be the period covered any one invoice.

However, the IGA warns that if the cancellations are “not sufficiently specific” it will be down to the court to interpret their meaning.

An IGA spokesperson said: “There are significantly less statutory protections in business to business contracts.

“If you have signed it you will likely be bound by the terms, so read any terms thoroughly.

That said, there is some protections and arguments that may apply.

Unfair Contract Terms Act 1977

“The most likely is under the Unfair Contract Terms Act 1977.

“Where you are contracting under the other side’s standard contract, section 17 of the act would prevent them from being able to use their standard terms to ‘render no performance, or to render a performance substantially different from that which the … customer reasonably expected from the contract; if it was not fair and reasonable to incorporate the term in the contract’.”

Where the original contract is sold as one year, garage owners may be able to argue that any clause that entitles the other side to renew automatically would be unfair, according to the IGA.

“Regularly review contracts”

The spokesperson added: “Check all contractual terms before reaching an agreement as prevention is better than cure.

“Once signed regularly review contracts to ensure they remain relevant and, where you are unhappy that you are familiar with the steps needed to cancel them.

“This is particularly important for ongoing contract such as laundry contracts, waste disposal contracts, advertising contracts insurance contracts.”

For further information about the IGA, select ‘more details’ below.

Has your business suffered from automatic renewals? Share your comments and experiences below.

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