Crichton,
If you've sent them a letter they are basically stuffed, assuming you have a copy of it, which you should send to them to support your case, by recorded delivery too.
Contracts can be successfully challenged, if the terms are deemed unfair, or unreasonable, my son is a litigation lawyer and deals with these types of issues on a daily basis. For the sums of money involved, a couple of hundred quid and with it the risk of having to pay your legal costs should they lose deters most from pursuing these rather petty matters, but they do like to use the threat of such action to try and frighten you into submission.
Simon