As this month’s newsletter theme is AI, I would like to tell you about how I used AI to help me to go through a legal document. I became aware of this document very recently and it is the Master Agreement we have with one of our suppliers. This supplier is a very large company and deals with many MSPs like ourselves, providing software that we then sell on to our end users. End users are not able to buy the software direct from such suppliers and have to deal with middlemen like ourselves.
Generally speaking, companies operate on an ethical basis and have terms and conditions that are reasonable – we certainly do – and we expect our suppliers and clients to also operate in such a manner.
I had cause to go through the Master Agreement because one of our end users was recently forced into administration and has gone out of business. They were very longstanding clients and according to their published accounts appeared to be financially sound, so this was a shock. As they had recently agreed to renew one of their contracts with us for a three-year period, we asked our supplier to let us know what the cancellation charge would be. To our surprise, they said we had to pay the remainder of the contract in full and straight away. This amounted to many thousands of pounds, not a sum a small business like ours has just lying around. As the supplier would no longer be supplying the service, this struck me as wrong.
I used AI to go through the Master Agreement (all 26 pages in Word), to find out what grounds they would accept for cancellation. Even with the help of AI it took me quite a while!
It seems that there are some grounds:
- Non-payment of fees
- Unauthorised transfer of the product
- Lack of a written agreement with the end user
- Breach of law and/or sending spam
- Failure to complete required training
- Inability to pay
But: The supplier demands full payment if the contract is cancelled before the end “for any reason”, thus negating several of the grounds above.
We are putting in a claim with the administrators but doubt we shall be paid as we have never been able to recover anything when previous client businesses have failed.
So, the conclusion I have come to is that the supplier has made us agree to an unfair contract clause, making us responsible for an event totally out of our control. The supplier would no longer be required to supply the product, so they would not be incurring any costs. The most they should charge us is an admin fee based on their discounted lost profit, which we would be willing to pay. Obviously, we are still the losers, but at least we can accept the reasoning behind the charge.
For obvious reasons we have not cancelled the contract formally, so we are continuing to pay for a service that is not being provided. We are researching other suppliers, of course, and any contract will be put through AI to ensure that we do not inadvertently agree to another unfair contract clause.
