RTA Business Sales Specialist scam.
Discussion
Obviously, everything depends on the contents of the contract between the parties. If the contract states that RTA can apply an exit fee on termination, then theoretically they can.
As for this happening in this country, if it's a crappy contract then the friend shouldn't have signed it. No-one made him do it.
However, the law allows for unfair terms in contracts to be unenforceable so it really all depends. So rather than getting principled about the rights or wrongs, the first thing is to look at the actual contract and check its terms.
As for this happening in this country, if it's a crappy contract then the friend shouldn't have signed it. No-one made him do it.
However, the law allows for unfair terms in contracts to be unenforceable so it really all depends. So rather than getting principled about the rights or wrongs, the first thing is to look at the actual contract and check its terms.
PhilboSE said:
Obviously, everything depends on the contents of the contract between the parties. If the contract states that RTA can apply an exit fee on termination, then theoretically they can.
Clause 14 appears to say exactly that.PhilboSE said:
However, the law allows for unfair terms in contracts to be unenforceable so it really all depends. So rather than getting principled about the rights or wrongs, the first thing is to look at the actual contract and check its terms.
See above.CDB1983 said:
I think the contract seems highly unfair but then again I read contracts day in day out with my work. A mechanic generally wouldn't.
If you run any kind of business you need to understand what contractual obligations you are entering into.Particularly if you're a 'one-man-band' type of enterprise.
If you lack the necessary skills you either have to acquire them or find someone who does.
Then they can do the reading and explain how you may be exposed to financial risk.
I guess your mechanic friend doesn't read this newspaper.
https://www.mirror.co.uk/news/uk-news/asked-rta-bu...
Or use an internet search engine. In less than 30 seconds I found this.
CDB1983 said:
It sounds like they used some serious pressure selling and called him until he finally made an appointment with them.
Oh dear, if so that should be an instant red flag. Even more reason to do some research.He now has a choice. Pay, or wait and see if a claim materialises then defend it.
To put up an effective fight he MUST be prepared to get his ducks in a row.
Forewarned is forearmed. Knowledge is power.
I spend a lot of my life reading contracts, this one is pretty one-sided. Few obligations on RTA, for example.
I don't understand clause 2. It states that they have sole selling rights for 12 months (amended to 6 months by the hand written note at the bottom) however, it then states that sole selling rights continue after that date. Which would imply that the contract has no limited term (duration). That is not in itself an issue but it would be unusual for a service contract. Unfair? Only a court could decide.
It's obviously a fishing exercise. Find a small business owner/sucker, tell them they could sell their business, take £500 immediately, do nothing, wait some time, take £950. All the effort goes into the initial high pressure sale. People really ought to read and understand contracts before signing and if they lack the skills to realise the nature of the contract then they should take advice.
Is this contract unfair? Well, it places very few obligations on one of the parties - they just have to list the company on the website (did this happen?). But only a court could decide. Going that far will be expensive and risky. Your friend has 2 choices I can see:
1) Pay the £950+VAT now and treat it as a learning experience about not being a mug and how to read contracts, or at least get them checked
2) Do nothing, and expect to be chased indefinitely. Will RTA actually take someone to court? They might not want to risk having their business model torpedoed by having a judge deem their contract as unfair. However in that event they might just amend the contract slightly for newer customers and carry on.
What ammunition does your friend have? He would need to declare breach on their side:
1) You state that "His business wasn't listed anywhere for sale". This was an obligation on them under clause 15. If they did not do this then he could claim breach.
2) Clause 15 also states that RTA would produce sales particulars and "detailed" sales particulars. Notwithstanding the fact that no business would ever be sold based on any sort of sales particulars produced by an agent, if no sales particulars were produced by RTA then again this could be a breach.
However, given that the RTA business model is based on this contract I would expect them to have done the minimum required that they could defend and probably did place a mickey mouse listing on their website. A quick check of their website shows some businesses being listed with a paragraph of text that could pass as "sales particulars".
Personally I think your friend has been mugged and he now has to choose a path. Going the legal route will cost an awful lot more than the withdrawal fee with only the prospect of getting it all back in the event that it goes to court and your friend wins and is awarded full costs. My experience of contract lawyers is that they will not give an opinion on the chances of winning, due to the human factor (judge). So, is he a gambling man?
I don't understand clause 2. It states that they have sole selling rights for 12 months (amended to 6 months by the hand written note at the bottom) however, it then states that sole selling rights continue after that date. Which would imply that the contract has no limited term (duration). That is not in itself an issue but it would be unusual for a service contract. Unfair? Only a court could decide.
It's obviously a fishing exercise. Find a small business owner/sucker, tell them they could sell their business, take £500 immediately, do nothing, wait some time, take £950. All the effort goes into the initial high pressure sale. People really ought to read and understand contracts before signing and if they lack the skills to realise the nature of the contract then they should take advice.
Is this contract unfair? Well, it places very few obligations on one of the parties - they just have to list the company on the website (did this happen?). But only a court could decide. Going that far will be expensive and risky. Your friend has 2 choices I can see:
1) Pay the £950+VAT now and treat it as a learning experience about not being a mug and how to read contracts, or at least get them checked
2) Do nothing, and expect to be chased indefinitely. Will RTA actually take someone to court? They might not want to risk having their business model torpedoed by having a judge deem their contract as unfair. However in that event they might just amend the contract slightly for newer customers and carry on.
What ammunition does your friend have? He would need to declare breach on their side:
1) You state that "His business wasn't listed anywhere for sale". This was an obligation on them under clause 15. If they did not do this then he could claim breach.
2) Clause 15 also states that RTA would produce sales particulars and "detailed" sales particulars. Notwithstanding the fact that no business would ever be sold based on any sort of sales particulars produced by an agent, if no sales particulars were produced by RTA then again this could be a breach.
However, given that the RTA business model is based on this contract I would expect them to have done the minimum required that they could defend and probably did place a mickey mouse listing on their website. A quick check of their website shows some businesses being listed with a paragraph of text that could pass as "sales particulars".
Personally I think your friend has been mugged and he now has to choose a path. Going the legal route will cost an awful lot more than the withdrawal fee with only the prospect of getting it all back in the event that it goes to court and your friend wins and is awarded full costs. My experience of contract lawyers is that they will not give an opinion on the chances of winning, due to the human factor (judge). So, is he a gambling man?
Doing a bit more reading on RTA suggests that they are no strangers to a courtroom.
The Mirror has a story from 2018 (https://www.mirror.co.uk/news/uk-news/asked-rta-business-consultants-sell-12225817) about them losing in court as the judge decided that it was not a sole seller contract. As you say your friends contract is from some years ago it might be similar and therefore this argument might be used.
There's also lots of precedents of them reducing the withdrawal fee to about 50% to settle, so that's another option.
However a teeny tiny bit of due diligence on the contract and the other party would have caused your friend to run away. Their model is to prey on greed and stupidity - you'll notice the withdrawal fee is spelt out in words not as £950+VAT so that it doesn't stand out in the contract to someone scanning for monetary clauses.
The Mirror has a story from 2018 (https://www.mirror.co.uk/news/uk-news/asked-rta-business-consultants-sell-12225817) about them losing in court as the judge decided that it was not a sole seller contract. As you say your friends contract is from some years ago it might be similar and therefore this argument might be used.
There's also lots of precedents of them reducing the withdrawal fee to about 50% to settle, so that's another option.
However a teeny tiny bit of due diligence on the contract and the other party would have caused your friend to run away. Their model is to prey on greed and stupidity - you'll notice the withdrawal fee is spelt out in words not as £950+VAT so that it doesn't stand out in the contract to someone scanning for monetary clauses.
Forums | Speed, Plod & the Law | Top of Page | What's New | My Stuff