Contracts – use, abuse and downright dishonesty

November 22, 2011

At the end of this blog I’m going to list my top ten tips for things to check for regarding telecom related contracts and supplies.

I’m interested in your good and bad experiences with contracts, terms and conditions.  Spread the word and see if we can help to get companies to behave fairly.

If there are any greasy sales person types who like to tie people into long contracts at exorbitant rates or generally exploit people reading this go watch the football or something, this is not for you and you won’t like it, the rest of you, please read on.

I am prompted to write this because of an announcement from a generally trustworthy supplier as follows:

“Ofcom have announced a recent regulatory update regarding automatically renewing contracts in relation to small business customers of 10 employees or less.  From 31st December 2011 NEW customers (with 10 employees or less) cannot be signed into an automatically renewing contract unless the customer has opted in to the auto renew.  From 31st December 2012 the auto renewal cannot be enforced for EXISTING customers unless the customer opts in.”

This in my humble opinion is a good thing.  Don’t get me wrong, we need contracts because we cannot trust ourselves or at least we don’t know that we can.  Contracts as I am sure you all know can be used or abused and the abuse of them is something I really do not like.

“It’s in the small print.”  An old chestnut … if it’s in the small print and a piece of paper has been waved in front of you or you have been pointed to an obscure area of a web site where the T’s and C’s reside you must have read them, understood everything and memorised them so that you can remember every detail for the next 2 years along with the other 20 sets of T’s and C’s that you may have been presented with so far this year.  This of course is not what usually happens, most of us do not read the small print and if we do it is seldom that we really understand the implications of it.  We usually trust our supplier not to dupe us but of course they sometimes do. The  T’s and C’s attached to contracts is a prime place to sucker your mark.  It’s a kind of deceitful but legal confidence trick.  Sometimes it is what they don’t say that catches you out.

Cartoon sourced from

If contracts are fair the chances are that you will not be unpleasantly surprised later on down the road if an issue arises even if it is not quite as you would like it.  The pertinent points of a fair contract are usually few, simple and generally already what people are used to.

Contracts are there to protect both parties and in my opinion are best rolling monthly or on a 12 month basis with no restrictive notice window at the end of the initial contract.  Yes, if there is a special deal in it and a longer term is needed to cover that deal and make an honest profit.  Yes we need things defined so we have a point of reference should there be issues.  Auto-renewal is ok as long as you retain your notice of termination anytime beyond the initial contract term.

Here’s one of my favourite extracts:

“The Agreement shall take effect from the date You sign the Agreement or verbally accept. The Agreement shall  continue unless terminated in accordance with its terms or by either party giving to the other not less than THIRTY-SIX MONTHS’ prior written notice (in order to be valid, such notice must not expire before the end of the Initial Period set out in the Form). If You give thirty-six months’ notice to terminate You must switch the Telecom Services to another provider at the end of such notice period. If You have not transferred the Telecom Services to another provider within 30 days following the end of the notice period, You will be deemed to have withdrawn Your notice of termination and the Agreement shall continue in accordance with its terms.

 If You purport to terminate the Agreement by giving less than THIRTY-SIX MONTHS’ prior written notice, You will be regarded as having committed a material breach which is incapable of remedy, for the purposes of clause 10.1.2, and We may choose to terminate the Agreement in accordance with that clause and claim damages from You pursuant to clause 10.4.”

Yes, you read that correctly.  A small company signed into a 36 month contract with a 36 month notice period and should they manage to get the 36 months’ notice in at the start of a term they have 30 days to move to another provider or are back in term.  Scandalous!  I am really tempted to name them but that would probably be bad form on my part although I’m not sure it would take much convincing to get me to do so.

And so to my top 10 things to watch out for in telecom related contracts and supplies, this includes lines, calls, broadband etc.  There are some fantastic suppliers out there that will sell you goods and services at fair prices and look after you to the best of their ability post sales and of course there are bad suppliers (often with very good sales teams).  They will sell to you and then ignore you whenever anything goes wrong. They will only be interested in you when there is more money on the table for them.  Short sited in my opinion but there you go.  Again I could site examples but I will resist the temptation.

My top 10 things to watch out for:

  1. Contract terms – I think 12 months is normally enough.  If a supplier is good you will usually stay with them anyway.  If it’s longer than 12 months then there should be a good reason for it.  Ahhh, I hear you say, “I was offered a good fixed rate for a 5 year contract”, well, how often does a telecom related service go up in price compared to how often it goes down.  A competitive rate today may be a very poor rate a few years down the line.  Try to make sure a longer contract really is worth it.  Ask around perhaps.
  2. Notice periods – A lot of suppliers are asking for 90 days’ notice now and I think that’s enough.  Beware of notice windows attached to auto renewals where if you don’t give notice in the appropriate window you are stuck in contract for another term, if the contract is 5 years then to miss the windows means you may be stuck with a supplier for 10 years at least.
  3. Upgrade / Downgrade penalties – If you want to upgrade or downgrade a service, are there any penalties and/or when can you upgrade or downgrade? Businesses change and need flexible suppliers.
  4. Call billing – Calls should be billed by the second these days, full stop.
  5. Call minimum / connection charges – most businesses make a lot of short calls so if there are minimum and/or connection charges they may very well make up the bulk of your bill.  Better to pay a little more for your’ per minute rate and have zero minimum and connection charges.
  6. Capped calls – Sounds good to talk for an hour for 10p but as in point 5 most business calls are short so unless you make a lot of long calls then this is not quite as good as it sounds.
  7. Broadband extras – as you may have read in my previous blogs there are some options that go with your broadband such as static IP’s, extra gigabytes on capped broadband etc.  For what you need, what is included, what is not and how much do extras cost?  For example £1 or £2 per extra gigabyte of use is ok.  Expect your first static IP to be included with business broadband.
  8. Are your bills going to be itemised to your satisfaction, do you have to pay extra for this?  If there is insufficient detail then how will you know what you are paying for exactly. Are the bills easy to understand?
  9. What’s the customer service like, what happens when you need to report a fault?  If a fault occurs and you have to ring your supplier 4 times, explain your fault 4 times to 4 different  people, spend 3 hours on the phone and chase it over 3 weeks I think you will be less than satisfied.  A 5 minute call to a good supplier who will keep you updated until the fault is resolved is better.
  10. Positive spin – This can be used to gloss over some of the less welcome clauses in a contract so I’m afraid it is a good idea to read the small print even if it takes an hour or so of your time.  Three pages of literally small print is plenty, if someone presents you with 10 pages of tiny print then you might want to question that in itself.  If the T’s and C’s are incomprehensible, perhaps walk away.

How am I doing?  Please help me to improve my blogs by commenting.

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