When does a contract start?

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sen8or

1789 posts

Uber Geek

#2301450 19-Aug-2019 08:26

Depends on the amount of the claim. Engaging legal advise isn't cheap, $250-$600+ per hour. For a lawyer to read over contract and go through timeline of events, draft up response / claim and send out, I would be surprised if it was less than $1k, probably more like $2 - 2.5k, then there is the response from the providers legal team with suitable read through and consideration by your lawyer, another hour or 2 billable time, it all costs and it all adds up very quickly.

Best case scenario, Provider A agrees to refund amount claimed. Weigh up the cost of legal fees against the best case scenario and add in time and effort in battling provider A, is it really worth it?

Only bizarre thing in this is that they not only took all money due as if services had been provided AND an early termination fee. If they have received all monies due under a contract, how can they then charge a fee on top for breaking the contract? Pretty sure thats against the contracts act as there was no financial loss to provider A through the breach (ignoring the dates). I would think that if Provider A began taking payments in July, they would be hard pressed to argue that the contract hadn't commenced then (they had received consideration for services).

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2301455 19-Aug-2019 08:36

I understand what you are saying, Pristle, but my point is that the poor service IS relevant. My point is there is a difference between cancellation for convenience, and cancellation for failure to supply. If a customer cancels for convenience and the contract requires a notice period, then it is reasonable for a supplier to rely on that. If a customer cancels for failure to supply (to the contracted standard) then the supplier can’t rely on a notice period.

It also reads like there was a ‘settlement’ around the issues getting the service established - the supplier can argue this in the absence of better documentation.

Obviously I don’t know the contract terms, but it seems to me your customer has taken a fairly casual approach to termination. What I would do, myself, is write a letter to the supplier and state that I am cancelling for failure to supply to the agreed standard, and not for convenience, and therefore aren’t intending to pay any fees. They can respond or not, but I suspect for $1,000 they won’t bother.

I wouldn’t pay a lawyer though, since that’ll no doubt be at least $1,001. Also, don’t take this as legal advice as I don’t know enough detail to advise correctly, and also i’m not a lawyer.

pristle

158 posts

Master Geek

Subscriber

#2301839 19-Aug-2019 18:55

The termination was not so much a cancellation but an election not to renew. This is a point that seems to be misunderstood.

I spoke with the client today I think I understand his thinking and the timeline better. We went over the documentation he's got, and the two key parts that stand out are: 'term commencement is from the first month of active billing', which in his case was July 2016. The other referred to termination, stating it must be 'in writing not less than 60 days prior to expiry of the term'.

He took the first to mean 36 months from July 2016. Following from that he took the anniversary of signing to give 65 days notice in writing. Understanding and accepting that he'd be liable for any billing through to the end of July 2019. No dispute.

The provider are holding fast to September 2016 as the start date of the contract and what I wasn't aware of, they're demanding payment for services through to 30 Sept 19. On top of the $1000 early termination.

The thread began asking the question, when does the contract start? That's the hinge of the argument.

Is it when ink is put to paper?
Or when the first payment is processed? (which seems to apply on this case)
Or when the provider decides "Ok we've finally managed to get the client some semblance of the service he contracted us for, so we think the contract starts now"?

Given the providers stance, it appears this may go to some disputes authority. Perhaps not instigated by the client.

sen8or

1789 posts

Uber Geek

#2301978 19-Aug-2019 21:12

Their own contract seems straight forward - from the first month of active billing. If they took payment in July, I don't see how they could argue that "active billing" hadn't commenced and again, payment for services or early termination, but I fail to understand how they can demand both, contract law simply doesn't allow for punitive measures, breach of contract can be for damages only (I'm no lawyer and have only done 2 rudimentary law papers so certainly stand to be corrected).

Dratsab

3946 posts

Uber Geek

Trusted

Lifetime subscriber

#2301996 19-Aug-2019 22:13

Based on the information you've put forward:

If I was your client, first thing I'd be doing is writing politely and factually to them pointing out their own clause regarding term commencement. I'd then refer them to an attached copy of their own invoice for that first active billing. My tack from there would be to say that I am disputing both the termination fee and the attempt at double-dipping by charging a couple of months fees as well, and state that I wouldn't be paying either. The disputing part is important as it stops a 'debt' being hived off to a debt collector which can make things messy. My final paragraph would advise that I'm more than happy for this matter to go to court if that's the track they wish to go down.

If they did summons me to court to seek payment, that's when I'd be getting a lawyer and I'd be looking at launching a counter claim seeking costs. If possible.

But that's just me - IANAL.

@dejadeadnz will undoubtedly have some much more sound/sane advice :-)

BlinkyBill

1443 posts

Uber Geek
Inactive user

#2302106 20-Aug-2019 08:20

According to the trail of comments, the service was finally fully supplied in Sept 2016, with a month’s rebate of the monthly charge to compensate for the inconvenience. The contract is being cancelled for convenience.

I would do as Dratsab suggests, write a letter noting the ‘active billing’ clause and the adequate notice of 65 days. Note clearly that this is a dispute as to the date of termination, and you won’t be making the payments (cancel any direct debit faciliities). Mention willingness to go to court as you are confident of your position having had the contract professionally reviewed.

Be concise and unemotive and leave the matter with them. You have the money - you don’t have to make the payments if you want to dispute this.

I would have cancelled for failure to supply though, but it’s too late for that now, in this case.

sen8or

1789 posts

Uber Geek

#2302140 20-Aug-2019 09:08

As per OPs original post, they have his client's money, unfortunately this places them in the box seat, they don't have to do anything as his client is the one chasing to get their money back. Small claims / disputes tribunal may be the only option (IIRC, small claims court is less than about $10k and no lawyers are allowed)

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Delphinus

611 posts

Ultimate Geek

#2302232 20-Aug-2019 10:00

Under $2000 is $45 through Disputes Tribunal: https://www.disputestribunal.govt.nz/forms-and-fees/

And no lawyers, so worth the client preparing the paperwork and going along for a few hours I guess?

pristle

158 posts

Master Geek

Subscriber

#2303922 22-Aug-2019 15:01

I hadn't heard from my client since the start of the week, an popped when I was in the neighbourhood earlier today.

The provider has agreed to make an offer in 'good faith' and refund half of the so-called early termination fee they've already taken. My client is leaving it as is.

He and his wife were saying what peeved them most was the handling from the provider's perspective. He has an email from their rep, who left the organization end of June, that stated that the provider would not seek to claim any early connection penalty if the client followed the timeline I've already outlined. The recent replies have been to the effect that the rep wasn't in a position to make such offers or discounts, but they'll meet halfway.

I just hope life under Provider B is a smooth one.

sen8or

1789 posts

Uber Geek

#2303971 22-Aug-2019 16:28

Was the email from the rep before or after they left the company?

If before, it would very likely be binding on the company, he/she issued the email as an agent of the service provider, your client relied on that information issued by the agent and your client has suffered a loss as a result. Fairly straight forward case of someone trying to weasel out and overcharge.

Again, my rudimentary understanding of legislation may be off base, but Companies Act 1993 s18 would seem to apply (employee is an agent), Fair Trading Act would also apply, particularly S9 (deceptive conduct)

sen8or

1789 posts

Uber Geek

#2303975 22-Aug-2019 16:34

If an employee oversteps their authority, that is not to the detriment of the innocent third party, its an issue between the employer and employee. Only exceptions being where there was an agreement or quid pro quo between employee and third party, or the obligation or undertaking is not one that would be considered normal for an employee to make (e.g. it would be unusual for a receptionist to bind the company to a large financial transaction and so would likely fail the "agent" test, but a receptionist ordering an abundance of stationery is probably quite normal and so would be binding).

Would a "sales rep" be able to bind the company in an offering? Tricky to say. Most company's have specific policies about what reps can and can't commit to, if they do 100 transactions inside those boundaries but step out once, again, likely to still be binding (especially if they say "I can offer you this term..... without qualifying it with a "heres what I'll try and do but I need to get authorisation..)

pristle

158 posts

Master Geek

Subscriber

#2304475 23-Aug-2019 11:21

I hear what you say and that was the client's thinking too. The offer was made before termination notice submitted.

Salt in the wound was that Provider B had offered to 'buy' any early termination charge levied by Provider A. But declined the offer based on what rep from A said. Since the charge was levied after service was transferred, the client felt he couldn't fairly go to the new provider with cap in hand saying "remember your earlier offer?"

It's done now.

sen8or

1789 posts

Uber Geek

#2304489 23-Aug-2019 11:49

Lodge a claim with disputes tribunal if under $2k, they'll send notice to defendant. Odds are, email in hand outlining terms of cancellation from a company representative will suffice for ruling to be swift. Really, no wriggle room that I can see, esp if filing fee is only $45 (and add that fee to the claim).

K8Toledo

1014 posts

Uber Geek

#2309433 2-Sep-2019 13:14

Also not a lawyer but have been down similar roads going into bat for clients over termination fees.

After poring over ISP T&C's and ComCom.govt documentation I learned early termination fees exist solely to recoup any hardware/installation costs outlaid by ISP (such as router or ONT etc), & secondly apply for the initial sign on period only (not re-signs).

May not be the exact info you wanted but hope it helps...

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