Is agency notice acceptable?

[oliverathom]

Hello, new to the site but really keen to get some advice.

I run a small company and last year instructed a PR agency on a 12-month contract that comes up for renewal at the end of February. We're very low on cash and their performance hasn't been great so I was going to give notice to terminate, however, I've read the contract and it states that we need to give 3-months notice before the end of the current contract otherwise the contract continues for an additional term (12 months). Is this legally allowed? We did sign the contract back in February 2023 but obviously didn't read it thoroughly enough.

The text in the contract is: If the Client wishes to terminate the Agreement at the end of the Initial Term, they must provide written notice (“Notice to Terminate”) to the Consultancy no later than 3 months before the end of the Initial Term. If no such Notice to Terminate is received, the term of the Agreement shall automatically extend at the end of the Initial Term for a further duration of 12 months and thereafter on the same basis (each period of 12 months being defined as a “Renewed Term”).

Is this really allowed?

Sorry but you signed the contract and agreed these terms.

You need proper legal advice as to whether or not you can get out of the contract.

Yes, that is allowed. Whilst the Unfair Contract Terms Act does apply to some business to business contracts, this would not be held to be unfair. I'm afraid you should have read the contract properly and put a reminder in your diary. You should take proper legal advice, but you may find that your only way out now will involve paying them damages for breach of contract unless they are willing to let you terminate.

If they’re not fulfilling their obligations under the contract, you may also have grounds for breach of contract.

Yes, depending on how poor their performance has been, you may be able to use that as leverage to terminate without the notice required in the contract.