Do I have a legal right to cancel a contract with a UK company that has gone into administration and been bought-out?
October 28, 2011 6:05 AM Subscribe
What's the legality in the UK surrounding contracts signed with a company that goes into administration and is bought-out by a different company and re-branded? Is the contract still valid? Can you get out of the contract without penalty because you signed it with a now non-existant company?
Background: I have an event (in Summer 2012) booked with a hotel. I've signed a contract and paid the deposit. Since signing the contract, the hotel has gone into administration and been bought-out by a different chain and rebranded (1, 2).
I am concerned enough about this series of events to try and move the event at a different hotel chain - my concerns being that I don't know how the buy-out/rebranding will affect the look of the hotel or the level of service. Changes such as up-front payment for hotel rooms instead of payment on check-in have already been implemented at the hotel, which also worries me (if they are struggling for money maybe they will cut back on staff and compromise quality of services in the meantime, or maybe even close down).
If I just cancel my booking, the contract says I lose the deposit. However I have no idea if the fact that the contract was signed with the old hotel chain means that there's a "get-out clause", so to speak, which allows me to cancel the contract without losing the deposit. There is no actual clause like that in the contract, but I was wondering if what UK law says about the situation?
The deposit is big enough that it would be a pain to lose it, but not big enough to get a lawyer straight away if it's already my legal right to cancel the contract. Of course if this is one of those things where only a lawyer can look at the specifics of the case and make a decision, then that's the way it is.
Background: I have an event (in Summer 2012) booked with a hotel. I've signed a contract and paid the deposit. Since signing the contract, the hotel has gone into administration and been bought-out by a different chain and rebranded (1, 2).
I am concerned enough about this series of events to try and move the event at a different hotel chain - my concerns being that I don't know how the buy-out/rebranding will affect the look of the hotel or the level of service. Changes such as up-front payment for hotel rooms instead of payment on check-in have already been implemented at the hotel, which also worries me (if they are struggling for money maybe they will cut back on staff and compromise quality of services in the meantime, or maybe even close down).
If I just cancel my booking, the contract says I lose the deposit. However I have no idea if the fact that the contract was signed with the old hotel chain means that there's a "get-out clause", so to speak, which allows me to cancel the contract without losing the deposit. There is no actual clause like that in the contract, but I was wondering if what UK law says about the situation?
The deposit is big enough that it would be a pain to lose it, but not big enough to get a lawyer straight away if it's already my legal right to cancel the contract. Of course if this is one of those things where only a lawyer can look at the specifics of the case and make a decision, then that's the way it is.
Warning: they may try and not refund you if you back out. Companies which are bought out and re-branded are not always obligated to pay the old company's debt (from experience, not legal knowledge).
My recommendation would be try and get a meeting (face to face if poss) with the new manager. Explain you'd like to keep the booking but ask if s/he can reassure you that the service will be up to scratch given recent changes. Hopefully, they'll want to keep your business enough to make an effort for your event. If they try and reneg or dally about it, remind them that as a "new" local business, they'll need reputation points to succeed.
posted by greenish at 6:25 AM on October 28, 2011
My recommendation would be try and get a meeting (face to face if poss) with the new manager. Explain you'd like to keep the booking but ask if s/he can reassure you that the service will be up to scratch given recent changes. Hopefully, they'll want to keep your business enough to make an effort for your event. If they try and reneg or dally about it, remind them that as a "new" local business, they'll need reputation points to succeed.
posted by greenish at 6:25 AM on October 28, 2011
Best answer: IAAL, IANYL. The contract validity won't be affected by the change of control of the hotel - the company you contracted with still exists. It's just like a person changing his or her name - it doesn't make that person's contracts void. Best to speak with the hotel or a lawyer but you're probably out of luck on this one.
posted by yogalemon at 6:44 AM on October 28, 2011
posted by yogalemon at 6:44 AM on October 28, 2011
Best answer: Do you know... Does the contract you signed have a "successors and assigns provision?" I'd be surprised if it doesn't as it is a common element in most commercial contracts. It usually reads something like:
This agreement is binding upon, and inures to the benefit of, the parties and their respective permitted successors and assigns.
In law this can have arguably up to five different meanings but, in general practice—and in common law even without the presence of the clause—it means that both parties (you and the hotel) are obligated to perform the contract terms even if the hotel management changes.
(IANAL)
posted by bz at 8:35 AM on October 28, 2011
This agreement is binding upon, and inures to the benefit of, the parties and their respective permitted successors and assigns.
In law this can have arguably up to five different meanings but, in general practice—and in common law even without the presence of the clause—it means that both parties (you and the hotel) are obligated to perform the contract terms even if the hotel management changes.
(IANAL)
posted by bz at 8:35 AM on October 28, 2011
I wouldn't be worried based on these news reports alone. The general idea with this sort of deal is to improve the economic health of the business. The up-front payment policy (is this actually affecting you, since you've booked in advance? or are they demanding money from you or your attendees now?) is simply them trying to be more fiscally conservative, maybe to satisfy the interests of the RBS as part-owner. I think there was much more of a risk of the other things (compromising service, shutting down) under the old ownership, which was clearly actually struggling. If anything, I'd be breathing easier now.
posted by dhartung at 1:10 PM on October 28, 2011
posted by dhartung at 1:10 PM on October 28, 2011
This thread is closed to new comments.
posted by devnull at 6:21 AM on October 28, 2011