The end of auto renewable contracts?

Ofcom (the communications regulator) has started a consultation into a proposal to outlaw contracts which automatically renew at the end of their term and which tie the customer into a minimum repeated contract term.

The idea behind these contracts is that the customer has to "opt out" otherwise renewal takes place automatically.  Once automatic renewal has occurred then there is usually a penalty to terminate the contract early.

BT is the main provider of "rollover contracts" although several other suppliers also use them, and Ofcom estimates that 15% of UK consumers are subject to these contracts at present.

The consultation ends in May this year so with luck we might see the end of these sorts of arrangements shortly after!

Lyn Brisley looks at the new Supreme Court ruling on pre nuptial agreements

Pre-nuptial agreements allow people to ringfence part of their wealth at the outset of a marriage. They are enforceable in many countries but they have never been binding in England and Wales

However, the Supreme Court has ruled that a pre-nuptial agreement is binding in the case of a German paper company heiress.

Katrin Radmacher's ex-husband Nicolas Granatino went to the Supreme Court after appeal judges slashed his divorce settlement from more than £5m to £1m.

The Supreme Court said it agreed that in the right case pre nuptial agreements can have decisive or compelling weight.

The case was seen by lawyers as a test of whether “pre-nup” agreements were applicable in law in England and Wales.

The judges deciding the case said "it will be natural to infer that parties entering into agreements will intend that effect be given to them".

In effect, therefore, these agreements are now binding unless they are unfair. So if the parties enter into a "pre-nup" freely, are fully informed of all the relevant financial and other information, and the implications of the agreement, then the courts will generally uphold the terms of that agreement.

The president of the Supreme Court made it clear, though, that courts would still have the discretion to waive or vary any pre nuptial (or post nuptial) agreement especially in cases where the terms of such agreement would have an adverse effect on any children of the family.

The ruling has been hailed as a judgement for a modern society, but there are some who believe it will significantly damage the financially weaker party in divorce. If that party, normally the wife, is held to the terms of a pre-nup she may be deprived of a considerable chunk of the couple's wealth.

The Law Commission is due to report in 2012 on whether a change in the law should be made to ensure pre-nuptial agreements are fully enforceable.

If you, or anyone you know, needs advice on any pre nuptial agreement then please give Lyn a call on 01733 888841.

Battle of the Forms - who wins?

A legally binding contract requires offer and acceptance. However, it is not unusual for commercial transactions to be negotiated by a series of documents (e.g. request for quotation, quotation, purchase order, acknowledgment of purchase order etc.) each with reference to that party’s T&Cs.

Where each subsequent document seeks to impose different terms, it will amount to a counter-offer which requires acceptance by the other party. The usual position is that the last party to send its document prior to performance will have its T&Cs govern the contract – providing the other party can be said to have accepted it by way of its conduct. But, can this rule be overridden? Certainly Tekdata thought so in Tekdata v Amphenol. The parties had a long standing trading relationship where Amphenol supplied cable connectors to Tekdata, who then supplied various cable assembly products up the contractual chain. Tekdata brought a claim against Amphenol for late delivery and goods not being fit for purpose.

The last pre-contract document was Amphenol’s Acknowledgement of Purchase Order which unsurprisingly referred to Amphenol’s T&Cs. However, Tekdata argued that due to the parties’ trading relationship and agreements with other parties in the contractual chain (where time was of the essence) it must have been the parties’ intention that Tekdata’s T&Cs (as per its Purchase Order) were incorporated. On appeal, the Court said it would require very strong evidence to displace the traditional rule of offer and acceptance where there is a battle of forms, and so Amphenol’s T&Cs were the ones applying to the contract.

COMMENT
A battle of the forms can have a number of consequences, some of which may be surprising to the parties. The message is that a legally binding contract still requires an offer to be unequivocally accepted – whether by words or conduct.