Negotiating release from £170,000 corporate energy supply liability

Background

The client entered a contract with the supplier (‘the Defendant‘) for the supply of electricity services to its large scale manufacturing plant (‘the Contract’). The Contract required the client to give written notice to terminate at least 30 days before its renewal date.

The client appointed a third-party intermediary (‘the TPI’) who found a better deal with an alternative electricity supplier (‘the New Contract’). The client instructed the TPI to terminate the Contract.

The TPI emailed the Defendant to terminate the contract 31 days before the renewal date (‘the Termination Email’).

On the date of switch over to the new provider, the Defendant blocked the transfer. It claimed that it had not received the Termination Email and that the client had not effectively terminated the Contract. The Defendant claimed that the Contract had automatically been renewed at the Defendant’s out of contract rates which were significantly higher than the New Contract rates. The Defendant refused to release the client from Contract. The client would have been forced to pay an additional £170,000 if it was tied to the Defendant’s out of contract rates (‘the Loss’).

Our instruction

As part of our initial analysis, we provided advice on the prospects of success of claims against the TPI and the Defendant. We were instructed to represent the client in its breach of contract claim against the Defendant. It was critical that the client maintained supply to its factory whilst the dispute was settled and this was the central point to our strategy.

The First Offer

Following service of the Letter Before Action, the Defendant made an offer which reduced the Loss to £30,000 (‘the New Loss’). The New Loss comprised of the costs the client had already paid the Defendant under the out of contract rates. We advised the client to press the Defendant for complete reimbursement and were instructed to put forward a counter offer.

The Second Offer

Following a second round of pre-action correspondence, we successfully convinced the Defendant to release the client from the out of contract rates, refund it any costs paid under the out of contract rates and provide the client with a rate for the next year that was better than the New Contract rate.

The Result

The client’s net exposure was reduced to close to zero whilst maintaining continuity of electrical supply for its manufacturing plant. The client received a quick, cost effective resolution which amounted to “the best outcome”.

Our Experience

Our Dispute Resolution team has experience negotiating contractual disputes for both commercial and individual clients. We are adept at deploying the right strategies to secure quick, cost effective results for clients without the need to issue court proceedings.

If you would like to speak with one of our dispute resolution solicitors, please contact Amelia Williams on 01202 099095, email [email protected] or Taylor Anderson on 01202 204530, email [email protected] or complete the form below.