Entrepreneurship & Small Business

Dad closed his business, some provider is asking for ~$3,700

  • Last Updated:
  • Dec 12th, 2018 12:09 am
[OP]
Jr. Member
Aug 3, 2010
119 posts
71 upvotes
North York

Dad closed his business, some provider is asking for ~$3,700

Hello,

Recently my dad retired and closed his convenience store business. He had an ATM machine and when we notified the service provider that we’re closing down, they asked that we pay $3,700 in lost revenue. Here are the details:

1. The agreement with them was signed on April 2008 (10+ years ago).
2. It states that the contract is for 48 months and automatically renews at the end of each term. Therefore it effectively went from 2008 to 2012, 2012 to 2016, and 2016-2020. It also states that we have to give them 120 days prior notice to the end of any given term to terminate the contract.
3. Because we no longer operate the ATM machine, they want us to pay for the revenue that will be lost for the ~17 months that remain on the current contract term. We fully own the machine, they only process the transactions.
4. My dad is the sole proprietor so he is on the hook for anything the business is liable for.
5. This came to us as a surprise because since the signing of the contract in 2008, there was zero contact with them so we weren’t thinking that there was an auto-renewing contract. We had expected to at least receive some sort of documentation or notification of the auto-renewals.

My dad is old, still has debt, and the business was not doing well (we weren’t able to sell it) so this is incredibly difficult for us to have to consider settling this. I was thinking that the whole auto-renewing aspect seems a bit shady so I’m wondering if there’s anyway that the contract isn’t binding? They’ve not once notified us about renewal. My dad’s old and doesn’t speak English very well, so catching something like this was hard. Looking for advice. Thank you.
25 replies
Deal Fanatic
Jul 4, 2004
7584 posts
617 upvotes
Is it possible to install it somewhere else and then give them the 120 day notice? If the contract isn't location specific, install it in your garage, connected to a phone line and leave it running for the 120 days notice given.

You could also ask one of the other merchants on the plaza if they'd be willing to take it over?
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Deal Fanatic
User avatar
Mar 23, 2008
7466 posts
4331 upvotes
Edmonton
It sounds like the contract was pretty clear, and whoever signed it didn’t care enough to object before signing. So to try to claim now that it was “shady” seems like a very weak argument.

As a business to business contract, he’s also probably also not going to be protected by the same protections that a “consumer” might be. But even then... the contract was agreeable enough to your father for 10 years, and now when it’s no longer convenient for him, he wants to break the agreement.

Sorry to come across as harsh. But if you want to fight it, you may want to focus on facts rather than emotions. You may want to let them got to court to prove their damages, but that may involve lawyers and paying a portion of their costs if you lose.

The idea of selling the machine to someone else or even letting them have it and take over the contract is a good one. Or you could try settling for a portion of what they’re asking.

C
[OP]
Jr. Member
Aug 3, 2010
119 posts
71 upvotes
North York
Thanks for your inputs. We sold the machine already so there's no way to further uphold the contract.

I'll consider settling for a portion of it but I think my dad will want to go to court. He really feels that he's been wronged here. I don't completely disagree with him because they're calculating the costs as if they're still providing the service. They no longer have to have us on their network and no longer have to pay for processing each transaction so they couldn't ask for this amount, I feel.
Member
Nov 12, 2014
476 posts
275 upvotes
Kingston, ON
eonibm wrote:
Dec 7th, 2018 8:44 am
What is the contract about? To keep it installed in a specific location? What does the contract say about a revenue guarantee?
I agree - there's got to be a clause regarding cancelling the contract and how much you have to pay if you do that, etc.
Jr. Member
Jun 15, 2016
133 posts
34 upvotes
The first step is to request a copy of the contract that was signed. See if they provide a copy of the contract with his signature on it.

Before doing anything else or making a decision on what to do make that request.
Member
Feb 18, 2014
204 posts
34 upvotes
The ATM company derives revenue from the transactions at the specific location. Selling to someone else doesn't necessarily get them the same revenue. As such, their agreements will typically stipulate that the ATM cannot be sold, moved, assigned etc by the person entering into the agreement, without written consent. This is pretty standard for most ATM providers.
Deal Guru
Aug 2, 2010
12932 posts
3231 upvotes
Here 'n There
gamechanger wrote:
Dec 7th, 2018 11:15 am
The ATM company derives revenue from the transactions at the specific location. Selling to someone else doesn't necessarily get them the same revenue. As such, their agreements will typically stipulate that the ATM cannot be sold, moved, assigned etc by the person entering into the agreement, without written consent. This is pretty standard for most ATM providers.
Likely so, but it still behooves the OP to examine the contract.
Member
Feb 18, 2014
204 posts
34 upvotes
eonibm wrote:
Dec 7th, 2018 12:14 pm
Likely so, but it still behooves the OP to examine the contract.
Absolutely.

OP, who is / was the ATM provider?
[OP]
Jr. Member
Aug 3, 2010
119 posts
71 upvotes
North York
Mikenello wrote:
Dec 7th, 2018 9:36 am
The first step is to request a copy of the contract that was signed. See if they provide a copy of the contract with his signature on it.

Before doing anything else or making a decision on what to do make that request.
gamechanger wrote:
Dec 7th, 2018 11:15 am
The ATM company derives revenue from the transactions at the specific location. Selling to someone else doesn't necessarily get them the same revenue. As such, their agreements will typically stipulate that the ATM cannot be sold, moved, assigned etc by the person entering into the agreement, without written consent. This is pretty standard for most ATM providers.
gamechanger wrote:
Dec 7th, 2018 12:33 pm
Absolutely.

OP, who is / was the ATM provider?
We have a copy of the contract and it states this:
In the event of a breach or threatened breach by the Customer or any of its employees, agents and representatives of any provisions of this agreement, CMI shall be entitled to an injunction [refraining] the Customer and/or its employees, agents and representatives, as the case may be, from disclosing, in whole or in part, any such Confidential information, or from turning off the ATM transaction services offered on the premises or from removing the CMI ATM located at the Merchant premises or from installing a competing POS or ATM machine on the premises for the purposes of offering cash back transactions and allows CMI to immediately remove such competing terminal under the provisions of this injunction. All legal, court and other fees associated with obtaining this injunction and or any physical work associated with this breach will be covered and paid for by the Customer as well as any party that is consulted to have induced a breach of the principle agreement between CMI and the Customer.
What I'm questioning now is how they're calculating lost revenue which is: average transactions per day * transaction fee * days remaining on term. What if we just got the machine and made one transaction per day and decided to terminate the contract?

The provider is CMI but I believe they're "Access Cash" now, they seem pretty big.

Thanks guys.
Deal Fanatic
User avatar
Mar 23, 2008
7466 posts
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Edmonton
qdn745 wrote:
Dec 7th, 2018 4:58 pm
We have a copy of the contract and it states this:



What I'm questioning now is how they're calculating lost revenue which is: average transactions per day * transaction fee * days remaining on term. What if we just got the machine and made one transaction per day and decided to terminate the contract?

The provider is CMI but I believe they're "Access Cash" now, they seem pretty big.

Thanks guys.
Their calculation method doesn't seem unreasonable. 17 months left * 30 days = 510 days. $3700/510 days = $7.25 per day. If the transaction fee was $3, that works out to about 2.5 transactions per day, which doesn't seem outrageous.

Even if you did what you suggested (which you can't, because you said the machine was already sold, so you're be out the cost of purchasing another machine), $3 * 510 days = $1530. And you'd still be breaking their contract, which says you can't move or turn off the terminal.

You can go to court. But they have a contract that your dad signed (presumably). He will also be liable for a portion of their legal/court fees if he loses, which he likely will.

Check out this case from the Supreme Court in BC. ATM company asked for $54k (6 year contract), ended getting $34k
https://www.canlii.org/en/bc/bcsc/doc/2 ... ultIndex=7

Then there's this case, with DirectCash. The judge touches on the automatic renewal and the calculation of damages. Both were judged legal. DirectCash had a very similar contract to the contract you showed. They asked for $63k, and got $63k plus damages.
https://www.canlii.org/en/mb/mbqb/doc/2 ... ultIndex=6

You can do your own searches in the Canlii system to see what you can find.

C
Deal Guru
Aug 2, 2010
12932 posts
3231 upvotes
Here 'n There
Your Dad is SOL. Even though he doesn't speak English well he did perform the act of signing something and you don't have to understand English to know that and that is what is coming back to bite him. The fact that he then also forgot he signed an agreement and then furthermore made assumptions that it was simply ok terminate unilaterally is immaterial.

I'd offer then a settlement that is less than what they are looking for and explain his financial situation. If they don't accept he could just not pay and get sued and then still not pay and let them find his assets.
Member
Feb 18, 2014
204 posts
34 upvotes
CMI was the ATM arm of Monex, and there’s plenty written about them here and elsewhere on the internet...You are correct that they sold to Access Cash. The agreement was airtight. See if you can negotiate a settlement.
[OP]
Jr. Member
Aug 3, 2010
119 posts
71 upvotes
North York
CNeufeld wrote:
Dec 7th, 2018 5:31 pm
Their calculation method doesn't seem unreasonable. 17 months left * 30 days = 510 days. $3700/510 days = $7.25 per day. If the transaction fee was $3, that works out to about 2.5 transactions per day, which doesn't seem outrageous.

Even if you did what you suggested (which you can't, because you said the machine was already sold, so you're be out the cost of purchasing another machine), $3 * 510 days = $1530. And you'd still be breaking their contract, which says you can't move or turn off the terminal.

You can go to court. But they have a contract that your dad signed (presumably). He will also be liable for a portion of their legal/court fees if he loses, which he likely will.

Check out this case from the Supreme Court in BC. ATM company asked for $54k (6 year contract), ended getting $34k
https://www.canlii.org/en/bc/bcsc/doc/2 ... ultIndex=7

Then there's this case, with DirectCash. The judge touches on the automatic renewal and the calculation of damages. Both were judged legal. DirectCash had a very similar contract to the contract you showed. They asked for $63k, and got $63k plus damages.
https://www.canlii.org/en/mb/mbqb/doc/2 ... ultIndex=6

You can do your own searches in the Canlii system to see what you can find.

C
Wow, what a great resource, thanks!

I see that the laws agree with Access Cash here, so it's not looking good for us.

I couldn't find cases more similar to ours - a business that closed its doors. I may be grasping at straws here but: Is there any case to be made that there is no revenue loss since the store doesn't exist anymore? I.e., we're not using a competitor's service for cash withdrawal services there is technically no foot traffic in the store.
eonibm wrote:
Dec 7th, 2018 6:12 pm
Your Dad is SOL. Even though he doesn't speak English well he did perform the act of signing something and you don't have to understand English to know that and that is what is coming back to bite him. The fact that he then also forgot he signed an agreement and then furthermore made assumptions that it was simply ok terminate unilaterally is immaterial.

I'd offer then a settlement that is less than what they are looking for and explain his financial situation. If they don't accept he could just not pay and get sued and then still not pay and let them find his assets.
I agree that he should have read it carefully but it's easy to make the assumption that after 10 years, there wouldn't be an ongoing contract that extends to year 12. It's hard to remember a contract signed 10 years ago. I guess the disconnect is that we're all used to consumer protection laws.

I'm now considering the benefits of settling vs going to court - I'm not experienced in litigation so I don't know what the best move here is. Worried about having to pay their legal expenses if we lose.

Technically, they don't have our home address, so they might not pursue legal action over the hassle of finding us to serve us Face With Stuck-out Tongue And Tightly-closed Eyes

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