Regular readers may recall the problem that Mrs Smith had, earlier this year, when she terminated a telephone line supply agreement with TryOnLine (not their real names) on its first anniversary. She believed she was entitled to do so. TryOnLine claimed that she had agreed to a 5 year contract, and sought to recover from her the revenue that they would have generated over the remaining 4 years.
To recap on the basic facts:
- Mrs Smith is a lady in her seventies, who was cold-called at home by TryOnLine and persuaded to switch her telephone account.
- She did not sign any written contract. She paid £99 by direct debit as an upfront, annual charge and believed that she was effectively committed for a one-year period.
- At the end of the year, she decided that she didn’t like the approach of TryOnLine (eg their actions in making deductions from her account without telling her, causing her to go into the red at her bank), and switched back to the market leader, British Telecom (BT).
- TryOnLine then called her to try to persuade her to return to them, and at this stage mentioned a 5-year term for the contract, with penalties of several thousand pounds if she cancelled the contract. The amount claimed changed over time, adding to the suspicion that they were making it up as they went along. The phone call was followed up with a letter claiming £3,623.92, and later by an invoice for £2,469.85. The basis for these various figures was never explained.
- Terms and conditions were printed on the back of TryOnLine’s stationery, including a 5-year term and a provision stating that the remainder of the anticipated, 5-year revenue would be payable if the contract were terminated early. Mrs Smith was not aware of presence of these terms on TryOnLine’s stationery until her lawyer pointed them out. They are printed in grey ink in about 6-point type, Mrs Smith has poor eyesight, and she had no cause to look on the reverse of the only document that was sent to her when the contract was set up, namely a statement confirming that £99 was being deducted from her account under a direct debit arrangement.
- No reference to the terms and conditions was made in the initial sales call (as far as Mrs Smith recalls) or subsequently until the contract was terminated. No cooling-off period was mentioned, as required by EU consumer law.
Readers of this blog were generous with their suggestions on how to deal with this problem. Chris Shelley pointed out some case law that discussed when excessively long durations in consumer contracts might be considered unenforceable under consumer protection legislation. Francis Davey pointed IP Draughts to the terms of Government licences for telecommunications service providers, which required the initial period of customer contracts to be limited to 12 months. IP Draughts’ colleague Victor Warner gave some very practical advice that pressurising old ladies in this way could result in criminal or civil sanctions for harrassment under the Protection from Harrassment Act 1997. With luck, IP Draughts might have eventually stumbled across the case that Chris mentioned. It is doubtful whether he would have spent enough time to find the other areas of law that our readers mentioned.
Mrs Smith’s solicitor threw all of these items and more into a real stinker of a letter to TryOnLine, hoping to get them to back off and cancel their invoice. Instead, Mrs Smith received another invoice from TryOnLine for £0.00 plus a £3.00 surcharge for sending a paper invoice. We will give them the benefit of some very considerable doubts, and assume that this was an invoice “in the system”, reflecting their general incompetence and disorganisation, and not a coded response to the solicitor’s letter.
TryOnLine’s formal reply to the solicitor’s letter raised an interesting line of argument. They commented that most of the solicitor’s letter was based on the premise that the contract with Mrs Smith was a consumer transaction. They pointed out that they marketed themselves as suppliers of telephone lines to small businesses, and not to consumers. (When Mrs Smith’s solicitor looked at their stationery again, he noticed a strap line about this that he had glossed over before.) They alleged that Mrs Smith had confirmed that she was in business at the time the contract was made. They asked the solicitor to confirm whether Mrs Smith was in business. They hinted, without quite saying it, that if it transpired that Mrs Smith was not in business, they would have a cause of action against her for misrepresentation. They also appeared to be hinting that they were expecting an offer of settlement.
Responding to this letter required some thought. On the one hand, TryOnLine had cold-called Mrs Smith at home, in relation to her domestic telephone line, which was the sole land line going into her home, which she shares with her daughter. They persuaded her to cancel her (non-business) telephone contract with BT. When she terminated her contract with TryOnLine, she reverted to a non-business contract with BT.
Mrs Smith is a semi-retired, or almost completely retired, dancing teacher. Her teaching is now limited to 2 hours on a Saturday morning in a community centre in a nearby village. The telephone line is used in connection with this “business”. On a small point of detail, Mrs Smith does not claim any part of the cost of the telephone line as a business expense. She does not recall having a conversation with TryOnLine about her business activities.
Looking at some of the European case law on the question of when someone is acting as a consumer, it seems that small-scale activities of this kind might be disregarded by the courts. There is also some old English case law under the Unfair Contract Terms Act 1977 which points in a similar direction.
Mrs Smith’s solicitor carefully explains all this in a further letter to TryOnLine, and points out that Mrs Smith has no intention of paying them any money. He suggests that the facts have now been exhaustively explored, and that no purpose would be served by further correspondence. He indicates that there would seem to be two alternatives. Either TryOnLine confirm that, now they understand the full picture, they withdraw their invoice, or litigation must now be commenced.
TryOnLine reply with a face-saving formula, stating that, as Mrs Smith has retired from business, they are closing the account. The clear inference of this letter is that they won’t be chasing for payment of the invoice. At some point, when he has time, Mrs Smith’s solicitor will confirm this in writing.
So, thank you everybody who came up with suggestions. A small book could be written about the law in this area and how it can be applied when dealing with suppliers who engage in sharp practice. IP Draughts is not volunteering to write the book any time soon.