When does a contract start?

Forums › New Zealand Broadband › When does a contract start?

pristle

87 posts

Master Geek

#255551 17-Aug-2019 13:31

I have a client who has posed this question to me. He's having a bun fight with a provider presently. All will remain nameless in this exercise.

So way back in early 2016 my client changed the focus of his business, which saw him relocate to a fibre only development. Among the services sought for his new premises was phone (with a requirement for an analogue line for fax) and internet. When reviewing options at the time, he was steered to Provider A.

Liking what he saw in their offering, he signed up to them for 3 years in late May 2016. They were also assured that all would be ready to go for a July opening day. The client eventually moved into the premises in July 2016 in readiness a delayed August July. However after all sorts of ~~excuses~~ issues (mostly Chorus related from what Provider A has explained), the client eventually got all services delivered live in late September 2016.

Since then they have experienced equipment failure of routers, handsets and complete loss of cloud PBX service. With the services needing to be routed to cell phones.

With this experience in mind they decided at the start of this year to reflect and review their involvement with Provider A. They scouted for alternatives and decided on Provider B. In May 2019, ahead of the anniversary of the 3 year contract with Provider A, they provided the required 60 days written notice to terminate services.

At the close of July, Provider B picked up the reins. They visited site, and with my assistance, disconnected and packaged all equipment belonging to Provider A. Provider B equipment was installed and within an hour all services were fully functional. There was a glitch with the monitored alarm, but that was because I reinstated a cable to the wrong socket. No fault of either Provider.

To the grist. Provider A have billed my client, through a debit order (meaning they have his money), for services through to end of September AND a full 'early disconnection fee'. When queried, they argued that the contract only came into effect when all services went live in September 2016 AND NOT when the contract was signed in May that year.

My understanding has always been that a contract period begins from the date of the signature being inscribed, not when the service is delivered.

Is my client right in feeling somewhat aggrieved?

1 | 2

6031 posts

Uber Geek

Trusted

Lifetime subscriber

#2300880 17-Aug-2019 13:42

When service is delivered for sure!

k1w1k1d

668 posts

Ultimate Geek

#2300881 17-Aug-2019 13:44

I would suggest that the business owner contact their lawyer.

snnet

628 posts

Ultimate Geek

Subscriber

#2300882 17-Aug-2019 13:45

One person supports this post

What do their terms say? Dp they stipulate when the contract starts?

antoniosk

2004 posts

Uber Geek

Trusted

Subscriber

#2300885 17-Aug-2019 14:08

One person supports this post

Linux:

When service is delivered for sure!

This is my thinking as well; I imagine that at the start of this contract, because of all the problems and hiccups that payment was not made because service had NOT been provided to the customers satisfaction, and thus not accepted into service?

Was he paying the bill from the day he signed the contract for services not yet received? I doubt it, and you can't enforce a contract when you havent done what you agreed to do, only when the work is done and both parties agree.

If he had a discussion to reduce the total contract length from 3 years down to 30 months (allowing for 6 months for all the cockups), which sounds like it didnt happen... well....

Only other place from here is a lawyer and disputes tribunal, but without more info I'm not sure this is an easy win. I'm sure he's pissed off and disappointed - this sort of thing is sooooo common with business telco services - but that doesnt mean he can be let off early.

________

Antonios K

Dial111

763 posts

Ultimate Geek

#2300886 17-Aug-2019 14:26

5 people support this post

When did your client start paying for the service, July or September?

If July then provider A doesn’t have a leg to stand on. If September when the services went live then I’d say Provider A has an advantage to their argument.

pristle

87 posts

Master Geek

#2300891 17-Aug-2019 14:37

From what I can tell from the contract, there's no stipulation that the contract only starts from date of full delivery.

At the time of signing, the client completed a debit form. He's being paying from when services were due to begin, 1 July 2016. During the first year a months credit given for internet connection only. However the client still had to pay for equipment rental and phone services from 1 July, as the kit was on site and the phone services diverted to mobile. However the assertion of the provider is that the contract only started when ALL service went live.

Based on most legal contracts I've read, the effective date of a contacts, unless otherwise stated or a date stipulated, is the day the contract has been signed.

Lawyer, was the first thing I said to the client. To which he said, "we're talking about a little over a grand, that's what he'd cost just to get started". Alternative is Small Claims, but again, it's his time. I'd hate to think the provider is banking on this view and are expecting the client to just walk away, but it almost feels that way.

Handle9

3206 posts

Uber Geek

Trusted

Subscriber

#2300898 17-Aug-2019 15:20

IANAL but trying to claim a 3 year contract starts when the contract is signed rather than from when services are provided (and billing begins) is absolute nonsense. The intent of the contract term is very clear to all parties.

Trying to weasel out based on the signing date is pretty poor.

Delphinus

383 posts

Ultimate Geek

#2300923 17-Aug-2019 15:58

Handle9:

IANAL but trying to claim a 3 year contract starts when the contract is signed rather than from when services are provided (and billing begins) is absolute nonsense.

The post just above yours states billing began on the 1st of July.....

BlinkyBill

747 posts

Ultimate Geek

#2300926 17-Aug-2019 16:01

One person supports this post

Contract starts when the services start and when billing starts. 60 days notice of termination is not termination due to failure to supply.

I would have issued a notice of failure to supply, require Provider A to supply per the contract or terminate. No early termination applies since there is a failure to supply.

This ‘laissez-faire’ approach only means Provider A is able to bill - lack of professional advice hasn’t helped either.

BlinkyBill

snnet

628 posts

Ultimate Geek

Subscriber

#2300927 17-Aug-2019 16:03

I'd say they definitely have an argument if the billing started in July even if a credit was given for the failure of providing a service (whether their fault or their suppliers fault) because that's on them.

They need to accept it and if they felt disadvantaged they need to try and chase it up with their supplier (which probably won't go far but not the end client's problem)

pristle

87 posts

Master Geek

#2300931 17-Aug-2019 16:41

Just to try clear things up a little, the services provided by Provider A was broken up into different components, the key parts were: phone (cloud PBX), fibre connection and an internet data plan. Payment for ALL services began in July.

The client received phone service, in that, incoming calls were diverted to mobile phones. Meaning if you dialed the business number, someone answered. The client had service. No argument there.

However live internet services, that being IP phone and data connections, to site did not occur until September. Which is when Provider A insist the contract started, not when calls to the number were being diverted to another provider's mobile service.

The client received a months credit for the internet connection, data plan and I believe something towards their mobile bills for outgoing calls. I recall that this was not without haggling as I was in one of the meetings.

eracode

4237 posts

Uber Geek

Subscriber

#2300947 17-Aug-2019 18:54

Dial111: When did your client start paying for the service, July or September?

If July then provider A doesn’t have a leg to stand on. If September when the services went live then I’d say Provider A has an advantage to their argument.

IANAL but I believe this is correct. My understanding is that a contract is not in force until all the components needed for a valid contract are in place - one of which is ‘consideration’ or payment. So regardless of all the other facts, the contract is not binding or enforceable until payment is made. So the date at which the client started paying is critical here.

Sometimes I just sit and think. Other times I just sit.

SATTV

969 posts

Ultimate Geek

#2300991 17-Aug-2019 19:05

pristle:

To which he said, "we're talking about a little over a grand, that's what he'd cost just to get started".

As my accountant would say "just flush the toilet" pay it and move on.

Easy to say I know but sometime you just have to do it for the sake of your sanity.

John

I know enough to be dangerous

BlinkyBill

747 posts

Ultimate Geek

#2301152 18-Aug-2019 09:31

pristle:
Just to try clear things up a little, the services provided by Provider A was broken up into different components, the key parts were: phone (cloud PBX), fibre connection and an internet data plan. Payment for ALL services began in July.

The client received phone service, in that, incoming calls were diverted to mobile phones. Meaning if you dialed the business number, someone answered. The client had service. No argument there.

However live internet services, that being IP phone and data connections, to site did not occur until September. Which is when Provider A insist the contract started, not when calls to the number were being diverted to another provider's mobile service.

The client received a months credit for the internet connection, data plan and I believe something towards their mobile bills for outgoing calls. I recall that this was not without haggling as I was in one of the meetings.

This is all irrelevant. It’s history and if there was an accepted settlement for the start of the service, then that issue is dealt with.

The issue is the means of termination. Giving the required notice of termination means the standard end process applies. Giving notice of failure to supply is a different end process entirely. Standard ending means you pay, ‘failure to supply’ ending means the provider is in default and no, or reduced, payments are required.

For $1,000 I would, indeed, flush the dunny and move on.

BlinkyBill

pristle

87 posts

Master Geek

#2301413 19-Aug-2019 01:51

BlinkyBill, it's the history that puts the matter into perspective. The poor service is irrelevant, the client has paid regardless. This is a non-renewal of a contract that had reached its conclusion. The termination here applies to something that was required in writing from either party at the end of the contract period. Standard ending applied, client provided 60 days notice and paid for service through to the end of July 2019 (38 months from original signing, 37 from first payment).

Provider A are saying that the contract did not start until they resolved all their technical issues (for want of a better term) nearly 3 months after the agreed date of service, discounting when the contract was signed or even the date they banked the clients first cheque.

When I spoke with him earlier, he said he wished he'd responded quicker to an offer from Provider B. Turns out, back in March, when first looking at alternatives, a rep from Provider B offered to buy out any early termination that may be levied by Provider A. Unfortunately when he decided to sign 2 months later, that rep no longer worked there and there seemed to be 'nothing on file'. He chuckled and said "a case of you snooze, you lose."

I have advised him to either seek professional legal comment or consider dropping it and chalking it up to life. And of course regale the experience when someone asks "who do you use for your communications?"

1 | 2