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A company may terminate an ongoing agreement under certain circumstances if a customer behaves in a seriously inappropriate manner. In a recent case, an insurer was permitted to terminate the policy because the customer continued to insult employees. This demonstrates that normal rules of conduct apply to business conflicts as well.
What was it about?
A client became involved in a dispute with her insurer regarding coverage and repeatedly insulted the employees. The insurer subsequently terminated the agreement. The judge ruled that this was permissible: the repeated, offensive behavior constituted sufficient grounds to terminate the relationship.
Termination of a long-term agreement
You cannot always simply terminate a continuous agreement; often, grounds for termination, a reasonable notice period, or a compelling interest are required, depending on the contract and the circumstances. However, in the event of serious misconduct by the other party, there may be sufficiently compelling grounds to terminate the cooperation.
Standards of conduct also apply in business
The ruling underscores that you must adhere to normal rules of conduct, even in a business dispute. A disagreement regarding, for example, coverage, delivery, or invoices does not provide a license to threaten, insult, or intimidate employees. If a customer does so anyway, it could cost them their contract.
What can you do as an entrepreneur?
If your staff is treated unfairly, document the incidents, warn the person involved in writing, and point out the consequences. If the misconduct continues, you can terminate the agreement with a solid file and the proper notice of termination. A house rule regarding respectful treatment strengthens your position.
Frequently Asked Questions
Am I allowed to refuse or terminate a client's contract due to insults?
Under certain circumstances, yes: repeated, serious misconduct can constitute a sufficiently weighty ground to terminate an agreement.
Can I simply cancel a continuous contract?
Not always: often, grounds, a reasonable time limit, or a compelling interest are required. You are in a stronger position in cases of serious misconduct.
How am I in a strong position when cancelling?
Document incidents, issue a written warning, and build a file. A house rule regarding respectful treatment helps.
End a difficult customer relationship?
Our legal experts advise on termination and establish house rules in your general terms and conditions. View our contract lawteam or schedule a free consultation.
