Legally Right…Business Wrong

So I had a contract with ATT for our business landline. It auto-renewed about a year ago (without my knowing it). They claim I was notified via my bill but since I get it electronically through my bank I didn’t see it. So, when I cancel my landline in favor of wireless and VOIP I get hit with a $380 cancellation fee.
I contested the bill with their "customer care" department (got more feeling from a garbage collector!) and was told that there was a legally binding contract in place and that since THEY had lived up to their end of the bargain I should too. I will by the way, since I lost the argument.
What I tried to explain was the difference between a legal decision (i.e. the contract says I have to pay) and a business decision (are they willing to forgo the possibility of every having me return to ATT as a customer over $380). Apparently, ATT is so big and so powerful and so determined that they don’t care. OK. You’re huge and even if I did come back and spend a lot of money it wouldn’t really matter. You’d rather be legally correct and lost a customer for life (along with as many as I can take with me).
But here’s the valuable lesson. As a small business owner and operator, I can’t afford to be legally correct and business wrong. I can’t afford, nor do I want, to lose customers over a few hundred dollars. My decision would have been the opposite. In the spirit of service, I would have gambled on losing me for a while but keeping me happy and open to returning.
What would you do?