Client asked to terminate contract early - what would you do?

[Smallbusinessproblems]

I am a small business owner and signed a new client for a period of three months. I was as transparent about our services as I possibly could be during our initial consultation, made the client as aware as possible of differing results, and they were happy and appreciated my transparency.

We are approaching month three and they have emailed to say they are terminating their contract early, that they no longer feel we are a fit and ‘let’s enjoy our final week together’.

I’ve had no other negative feedback than been told we’re not a fit - we have been praised on our promptness and efficiency, but they don’t wish to continue - saying that they are a small business and therefore want to put the expense elsewhere.

Our contract states that our partnership is in full effect for a period of three months, and we have done everything as stated within correctly.

I feel uncomfortable saying no to their request because I wouldn’t want to continue working with someone who doesn’t want to work with me, but also I am a small business too, it was a significant payment (that I had discounted for them) and we have provided the service initially offered - I wonder why we should take a hit in income because they’ve changed their minds.

But I know we’re in a cost of living crisis and I feel guilty if they don’t want to continue for asking them to pay their final month, but at the same time the cost of living crisis is affecting us as a business too..

So my question is, WIBU to say it’s fine to discontinue, but the final month would need to be paid for as stated in the terms and conditions of the contract? Or would you accept it and move on?

Bill them anyway.

Of course you bill them for the three months.

Stick to the contract.
If they don't want to use the service they don't have to but they are contractually obligated to pay as agreed.

Absolutely stick to the contract especially if it’s already been discounted. CF.

When your in business then you need to make a profit to survive, yes if your company could afford it then you could consider it, but other than that id still.request the payment from them. @Smallbusinessproblems

The point of a contract is not to have to endure this kind of thing. Your wording is perfect - basically it’s their choice to not use your services but it’s but their choice to decide not to pay. They won’t get far in business if they don’t learn about contractual terms - and neither will you!

What does the contract say about the right of either party to terminate the contract? It should not be silent on this. There should be some sort of notice and termination costs/penalty term in it.

Stick to the contract.

It really matters what the contract says about termination. If the contract says nothing about how either party can terminate the contract, then it It is well established English common law that contracts which do not state how to execute a termination, can be terminated by one or both of the contractual parties giving reasonable notice.

Revise your contract terms and conditions to include any early termination compensation policy. Your contract should also outline the notice required to quit your services. Small traders cannot develop with uncertain business arrangements as clients being allowed to leave at short notice will affect your income. Look at others contracts who operate in your sector as it may reveal terms and conditions that you haven't thought about before. I did this when developing my own contract paperwork recently.

Absolutely bill them

I think what they mean by ‘not the right fit’ is ‘I don’t want to pay you’. Be firm and get a solicitors letter if they kick up so they know you are serious.

Sure but reasonable notice is a month. Which takes them to the end of the contract.

For me it would depend on the service and if they’re likely to leave a review.

If you’re a PR company for example, I’d just leave it. If you really rely on word of mouth for new clients. I say this as a business owner myself! But it sucks and it’s a shame they couldn’t give you constructive feedback. They just went straight for termination.

“Reasonable notice” varies depending on many factors. A 1 week notice on a short term 3 month contract with a new client could be reasonable in some industries.

OP would need to seek legal advice specific to the circumstances of the contract to get an idea as to what is reasonable. Besides, even if 1 week isn’t reasonable, then you can only claim compensation for what is reasonable and that may be less than a month’s worth of billing.

Yes, Scooby is spot on. If your contracts don’t have any terms covering termination notice & costs/compensation you really should revise them and negotiate them in advance so these situations do not arise.