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How To Break Telecoms Contracts

Business men boxing illustrate how to break business phone contracts

We are always being told by prospective customers that they wished they hadn't entered into a, one, two or even five year contract with their telecoms provider. So here is our, very personal guide, to what you can do to break the contract.


LAWYERS AND LAW

Lawyers the world over are kept rich by people who want to dispute contracts. I have spent over 40 years working to prevent them getting richer. So based on real world experience this is how to get out of a telecoms contract. So these are my original observations. They have not been cobbled together by cutting and pasting from other sites. The choice of whether to trust them or not is yours.
 
BUSINESS CONTRACTS

Business contracts are made between people and organisations who know what they are doing, or at least the law presumes they do. It is no good complaining that you didn't understand because you should have done. Your employees are your agents and what they sign, by default, binds you as certainly as if you had signed yourself. It doesn’t matter that your authority diagram or contract of employment says they shouldn’t enter into contracts, if they sign the document then you are probably bound by it. Your lawyer will be happy to talk about the niceties of implied authority and agency but don't go there. If the contract is signed assume it is binding.

MY EXPERIENCE

Back in the early years of this century I found out to my horror that an employee had signed contracts with a Xerox agency that meant we had to pay over a million pounds for photocopiers. She had been told repeatedly by the Xerox agency reps that the leases that she was signing were for trivial amounts of money. Eventually, the payments to Xerox were so huge that the alarm bells started to ring. I refused to pay any more and Xerox relied on the leases. Our barrister was clear that fraud had taken place and the contract was void. Xerox refused any compromises.
As the trial judge sat down in the Crown Court in Birmingham they relented and we asked the judge for 5 minutes to discuss the issue. The judge agreed and a deal was done. The lawyers got richer but at least we weren’t a million pounds poorer.

JUST WALK AWAY

Most telecom contracts are for a minimum term only. So, if you have signed up for 12 months then that is usually a minimum term – it doesn’t then start again every 12 months. Usually you can just give a months notice after the minimum term and walk away.
THE CONTRACT WORKS BOTH WAYS

You have to perform your part of the bargain which is usually to pay the bills on time as and when they are due. You also probably have an obligation to allow the provider access to do his work. However, your supplier also has obligations, which in the case of a telecoms company is to provide a service. If he fails to do that then the contract is broken and you are free to do whatever you like.

But it is not that simple. The obligations on the telecoms company will be as little as they can make them. So they will have agreed to provide some kind of a service at some point and they will also have made sure that they were not liable for their failure to do it. So the failure is difficult to quantify. If you are not happy then they will have a disputes resolution procedure and you can pursue that. However in my experience when things have gone disastrously wrong you simply want out.

GETTING OUT

You need to give the supplier reasonable notice of your dissatisfaction and the failure.  Do it as soon as possible and give them a reasonable period to correct it – say two weeks. When the two weeks are up then write again and give them another two weeks. Make sure that the company you are writing to is the one who is providing the service. After this period you should be fine to let them know that you think the contract is over.

The failure does have to be a real failure though. If the failure is that you no longer want to pay the extortionate bills they are sending you, that is not good enough.

MY EXPERIENCE

We signed a 12 month contract with Worldpay to provide credit card services to us last year. They failed in many ways and were late in others. They simply accepted our contract termination without demur and without any hostility.

LEASES

A word of warning – you may have a lease for the equipment and a contract for the phone service. If the phone service is poor then that has nothing to do with the lease and you must carry on paying for the useless phone equipment. The leasing company will sue as soon as you stop paying and you will have extra costs to bear.

If you have a lease for equipment then you can approach the leasing company to renegotiate it but they won’t usually. However, they may extend it so you can pay them more! There are only two ways that I know to beat this one – the first is to prove fraud as described above and the second is to go bust. However even if you go bust you may have unwittingly signed a personal guarantee in which case personal bankruptcy is the only out.

SUMMARY

Business contracts don’t need to be fair to be enforceable. However, they do need to be honestly entered into. To get out of them, you can either wait until they end or break them because of non-performance of the supplier. Dislike of the size of the bill is not grounds to break the contract.  If all else fails you can start liquidation proceedings.

David Hill
July 2016
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