Authority to renew small business contract
Jacinta, a small business owner, had been with her provider for more than 10 years. When her most recent two-year contract was about to expire, she decided to transfer all her services to a different provider.
Not long after the transfer, her original provider sent her a bill for $42,000 in early cancellation fees. The provider said that the fees were payable because she had renewed for another two years. Jacinta disputed that she had entered into a new two-year contract and asked for a copy of it. She discovered the receptionist, who had only worked for her for six weeks, had signed the new contract.
She disputed the fee because the receptionist was not authorised as an account holder. Despite the provider agreeing to waive the fees, Jacinta began to receive letters of demand.
Jacinta called the TIO. When we referred the complaint to the provider, it agreed that the receptionist did not have authority to renew the contract. The provider removed the $42,000 cancellation fee and stopped all debt collection action. The case was resolved and we closed the complaint.