Contract law in the UK can be quite complicated depending on the circumstances. Even if a seemingly secure deal is in place, either party may still have the right to cancel without any given notice.

This is why we highly recommend using a professional accountancy firm when drawing up any type of contract. Here at Neil Smith Accountancy, we will draft airtight agreements so both sides know exactly what is expected and the repercussions of cancelling.

We can also help if you are already in a contract and a client has suddenly cancelled. We’ve put together a brief article explaining your rights if this scenario has occurred.

Notice Period

Unfortunately, unless stated, a notice period is not an automatic right included in a typical contract. Check if this is the case with yours. If one has been included, and the client hasn’t provided the sufficient amount of notice before cancelling, then you have the right to start legal proceedings against them.

English Contract Law

In cases where a signed contract isn’t in place, English Contract Law will apply. It dictates that an agreement becomes valid when an offer of work is accepted by the recipient. The deal can be proved in various ways, be it email exchanges, invoices or work already accepted.  

Goods and Services

If your company sells goods and an existing client suddenly cancels, stop all deliveries to them. The client must then return any item already received – only then must a refund be made. Refer to the terms and conditions in the contract regarding this process.

Similarly, any service must also be stopped when the client cancels. All monies exchanged shall be returned for both parties, unless the contract says otherwise. In the majority of cases, it’s not possible to charge for completed work that hasn’t yet been delivered.

Breach of Contract

If any contract is ended in contradiction of the terms, you will be able to sue for damages if a satisfactory resolution cannot be reached. Of course, this is likely to be challenged so legal advice should be sought.

Professional Advice

As each contract case will be different from the next, it makes explaining an already complex law even more tricky. In addition, the terms of consumer contracts may also change once we leave the EU.

This is why it’s so important to get the initial agreement right, ensuring your rights are fully explained in the event of cancellation. More examples of specific cases can be found on the Contractor Calculator website here, although receiving professional advice for your situation is still recommended.

This is something we’re highly experienced in dealing with at Neil Smith Accountancy as part of our wider accountancy services. We’re on hand to help with any contracts issues you have, so feel free to get in touch today.

Cancelled contracts are just one thing to consider when you’re starting out. If you’re a sole trader starting your own business, find out if you need a business bank account.