post icon

We need your help – Moral dilemma!

Please take a few minutes to read the information below which is background information to a big problem we have at Heathfield at the minute.

About 3.5 years ago, the school took out a lease for our ICT suite hardware which was for 3 years and for 3 payments. The school sourced the hardware through a farily local authorised Apple reseller. As the school wanted to lease the hardware over 3 years, the school was given the number of a broker who would find the best deal for a lease. The Broker came back to school with a selection of leasing companies and one was selected. During this time, the school had finalised the quote from the authorised Apple reseller which included the following:

‘**company** will at the end of the terms of the lease donate the equipment to the school for a nominal fee of £10’

Thie above statement was on the agreed quote and the school signed it. The leasing company then bought the equipment from the supplier that we had received the quote from and leased them to us over a 3 year term. This whole transaction was completed by staff that no longer work at the school but we have all the paperwork including terms and conditions. We have now finished the lease, requested that lease to stop and fully expected to pay £10 to keep the equipment. However, The leasing company have invoiced us for a secondary lease for over £5000. We have challenged this invoice by speaking to the leasing company and explained that on our paperwork it says that we can have the equipment for a nominal fee of £10. They explained that this agreement is not in the terms and conditions of the lease. They are right, the terms and conditions make no reference to this nominal payment.

After speaking to the authorised Apple reseller, they have explained that this nominal payment offer was subject to a ‘Trading Agreement but since the financial crisis, this has been ‘ripped up’ by the leasing company.

We are now left with a leasing company saying that we can either keep the lease going as a secondary leasing period for £5000+ or make a payment of £2000 to keep the equipment. After writing to the leasing company offerring to pay £487 which is a valuation from our authorised Apple resller they have dropped the requested total to £1500 or we can return the goods to the leasing company as the terms and conditions state. We are wanting to close this chapter as we are wanting to forward plan our budget so we don’t have to keep some money asside just in case.

We have contacted out Legal Dept. and sent them all the paperwork. Legally we don’t have a leg to stand on and the the leasing company are right but the final figure is made up and does not constitute the true value of the equipment. This is not a legal dilemma but a moral dilemma!

What would you do?

Ideas:
Let the children decide?
Contact the local paper?
Pay the £1500 and draw a line under this?
Try to negotiate further?
Launch Blog/Twitter campaign and hope they let it go?

Do you know anyone or have contacts of people that could help us? Apple directors?

Please feel free to leave a comment on what you would try to do in this situation or offer any constructive advice. We do not want a long drawn out campaign as we had already allocated the money.

8 Comments

Leave a comment
  1. Doug Woods
    May 18, 2010 at 12:28 pm #

    sorry to hear about this sad state of affairs. It would be interesting to know if the staff who originally signed this agreement sought any legal or procurement advice beforehand.

    What you need to do now is decide what you want (not what you need to do!)

    I am assuming that you want to keep the equipment rather than hand it back. I’m not sure how much equipment is involved here but £1500 does not sound much to pay to have final ownership of the kit, albeit 3 year old kit.

    Does the lease agreement include any technical support or any other ‘value added’ service which you would possibly lose if you ended the lease agreement? Were any SLAs (Service Level Agreements) incorporated within the agreement and have these been met?

    Approaching the press could be risky, the story could generate sympathy for your case but equally it may draw attention to possibly poor financial acumen in the school (albeit by past staff).

    Sadly, leasing arrangements such as these can be a minefield and often return poor value for money. Did your staff use Becta’s investment planner before making the purchases, I wonder. Not that this will help you with your present situation but may be guides for future procurement.

    So you would appear to be left with 3 options; pay the £1500 (if you have it and can legally spend it) to keep your present kit, hand the kit back and pay more (not by leasing) to replace your kit with newer kit (maybe use this opportunity to consider a route other than ICT suites, e.g. handhelds and wifi) or try to negotiate further how much you can pay to buy out of the agreement.

    I know you say you’ve approached your legal team but has anyone else on the LA given you advice or support on the matter?

  2. John McLear
    May 18, 2010 at 2:15 pm #

    Ugh 🙁 Afraid you have to go with the paper work on this and take the hit as school.

    I wouldn’t get too vocal, I agree with Doug on that.

    It would be interesting to see what the pupils say. I mean if company X sold the school something on the grounds of a certain level of service and they can no longer provide said level of service then they should be named and shamed. However if company X said depending on Y and Z factors and the school agreed to Y and Z then the school took a gamble that didn’t pay off.

    Good luck getting it sorted!

  3. Kevin McLaughlin
    May 18, 2010 at 5:13 pm #

    I have to agree with Doug and John. Your school is legally bound to either pay the amount they suggest, not pay and hand the equipment back or continue the lease. The latter is pointless as the equipment is 3 years old and it would make more sense to go with updated tech. I would have to say hand it back and cut your losses buy before doing so, try to reason with the leasing company pointing out the valuation you received. Tell them your new financial budget will not stretch to the cover the cost they are demanding so can you come to a more favourable amount that would suit both parties interests. The kit is obviously not worth what they are trying to procur so it’s worth negotiating. If it isn’t successful return the kit and start afresh. Good luck with the outcome.

  4. Mr. Mitchell
    May 18, 2010 at 5:29 pm #

    Thanks for all you comments so far. I’m certainly not up for a public dog fight and I hope the post does show that we know we haven’t a legal leg to stand on. We are currently trying to negotiate, we have them down from £2000 to £1500 and I have asked to meet us half way at £1000. We would be happy with that. It’s just that initially, £2000 seemed a MASSIVE shock compared to the £10 we were led to believe.

    Doug, I don’t believe that the people who placed the order looked for legal advice when taking the lease out although I don’t know that for certain.

    I will keep you updated with all the developments but all this does highlight the situation many schools could find themselves in! I’m just glad that it wasn’t me that placed the order and signed all the paperwork!

  5. Bill Lord
    May 18, 2010 at 6:52 pm #

    My first reaction as a member of the management team would be one of indignation or frustration but I do think that the more measured approach cited by earlier posters is definitely right.
    I did ponder whether you could find some leverage through the quality of the work taking place at your school and the interest you are creating but I do fear that a lease company would not be interested.

  6. Martin
    May 18, 2010 at 10:55 pm #

    This is a terrible situation to be left in. I used to work for Apple Retail and my advice would be to perhaps try and speak to the Apple Education department. They may be able to assist or find a good negotiating route. Apple head office is in London and they can give you the number if necessary. Hope all is resolved without to much more frustration.

Trackbacks/Pingbacks

  1. Tweets that mention We need your help – Moral dilemma! « Mr. Mitchell's Blog – asksir.co.uk -- Topsy.com - May 18, 2010

    […] This post was mentioned on Twitter by David Mitchell. David Mitchell said: PLN-We seriously need your help! David v Goliath Please read, RT and comment! http://bit.ly/apvLXv What would you do face with moral dilemma […]

  2. We need your help – Moral dilemma! « Mr. Mitchell's Blog – asksir … Email Marketing On Me - May 18, 2010

    […] more: We need your help – Moral dilemma! « Mr. Mitchell's Blog – asksir … By admin | category: equipment leasing companies | tags: bankers-focused, firm, […]

Leave a Reply