MoneyMagpie

Jun 19

Unfair contracts and how to avoid them

Unfair contracts, particularly gym contracts, are one of the main problems dealt with by the Consumer Advice Bureau’s legal teams. Some contracts are unfair and even illegal according to recent laws and there are ways to get out of them without being sued for breach of contract. Here are the main ways to stay safe when buying.

We enter into contracts all the time. Sometimes we don’t even realise we are doing it, like when we buy things online. So it’s important to know what rights you have if you want to back out. In most cases, once you’ve signed a contract you’re bound by it and you can’t change your mind. But, in some circumstances, the law gives you the right to cancel.

Stay cool

Some types of contract are covered by cooling-off periods. This is a period during which you can cancel a contract without having to pay anything if you change your mind. The exact details vary depending on the type of contract but some give you seven days for you to re-think and back out. This applies if you buy after an unrequested visit from a salesperson or over the internet, phone or by mail order. If a contract is deemed to be unfair you can cancel it even if your cooling off period is over.

Types of unfair contract

It’s not ‘in good faith’ – If the contract is deemed to be unfair it may not be binding. If the trader, such a gym or mobile phone company has dealt unfairly with you, what is described as ‘contrary to good faith’, then you should be able to get out of it. The agreement must take account of your interests and rights and not excessively favour the trader for it to be fair.

You can’t understand it – If the whole thing is written in gobbledegook then that is also deemed as unfair. It must be expressed in plain language that you can understand, without the help of a lawyer. The good news is if there is any doubt as to what a term means, then the interpretation most favourable to you will apply.

You are made to sign in a shop or office – If you are forced to sign in a shop or office then you are almost definitely signing away your rights to wriggle out of it. Contracts signed in a shop or office do not come with a cooling-off period attached. This is why so many gyms make you sign on the spot while loitering in reception – you can’t back out once you’ve put pen to paper.

You were promised something different –  all too often all sorts of promises will be made to get you to sign up to a not-to-be-missed deal.  You may find that what you sign up to in the small print is not what you were told e.g. if you were assured that there were no hidden charges.  If you feel you were misled by the salesman and you relied on what was said, you may well be able to get out of the deal.  Promises do not have to be in writing to have legal effect.

Door-to-door salesmen – The best rule is not to buy things from people knocking on your door but if you must you should be aware of your rights. If you sign a contract made during an unsolicited sales visit to your home, when someone just turns up on your doorstep, the Doorstep Selling Regulations give you a seven-day cooling-off period during which you can cancel.

An ‘unsolicited visit’ is when the salesperson makes the first contact with you to request the visit, for example a door-to-door salesperson. This includes occasions when you receive an unannounced visit and then agree to the salesperson coming back at a later date.

If you sign a contract after an unsolicited visit, the salesperson must tell you in writing about your right to cancel. If they don’t the contract is not enforceable and they could be fined up to £2,500 for breaking the law.

This does not cover you for everything though, and the Doorstep Selling Regulations don’t apply to things worth less than £35, perishable goods, such as food and drink, or land, insurance and investment agreements. After you’ve agreed to it you’re stuck with that box of fish, those chamois leathers and the useless car insurance.

You should also be cautious of people coming to your home telling you that you need work done or you should switch energy, phone or electricity suppliers. Even if they put you on the spot and you sign a contract you should still be able to get out of it as long as you are within the cooling off period.

Buying online or over the phone

If you buy something on the internet or over the phone, by mail or fax order, the Distance Selling Regulations give you a cooling-off period of seven working days during which you can cancel the contract.

If you’re buying goods, such as a mobile phone, the seven-day cooling-off period starts the day after receipt of the goods.

If you’re buying services, such as changing your energy supplier, the cooling-off period starts the day after you agree to go ahead with the service. If you agree with the service provider that the service will start straight away, you waive these cooling-off rights.

The regulations don’t cover financial services, holiday or travel arrangements, tailor-made items or perishable goods, such as groceries, or CDs, DVDs or software if you’ve broken the seal on the wrapping.

Another thing you should be aware of is the possibility that someone will sign you up for something you haven’t asked for and will forge your signature to validate the contract. This sometimes happens with rogue phone companies that cold-call you about their service. One day you could realise that a completely different company is providing your phone service and billing you and you never asked for it. This is fraud and can be dealt with from that basis.

How to deal with unfair contracts

Take advice and know your rights.  If you have bought something and changed your mind within the cooling off period then don’t be afraid to ask for your money back. The legal advice service from consumer rights group Which?says:

Write to the supplier within the cooling-off period telling them you want to cancel your agreement. Instead of writing a letter, you can send a fax or email, which are good options if you’re close to the end of the cooling-off period.

If you’re buying goods the cooling-off period starts the day after you receive your goods. If you’re buying services, it starts the day after you enter the contract.

You don’t need to give a reason. If you’ve paid a deposit, ask to have this returned. If the supplier refuses to let you cancel or to give back your deposit, contact your local Trading Standards Department (England, Wales, Scotland) or the Department of Enterprise, Trade and Investment (Northern Ireland). Click on the consumer tab where it will outline what your rights are and how you can make a complaint. For specific complaints about energy doorstep sales contact Energywatch.

If you want to get money back that you have paid, you may be able to take the supplier to the small claims court, if the amount you’re claiming is less than £5,000 (England and Wales only).

Also remember that if you still have problems you can get a lot of help and advice through the government’s helpline Consumer Direct.

The importance of timing

If timing was important to your purchase because it was a gift for Christmas or a birthday then you can still cancel an order after the cooling off period has lapsed. Timing had to be part of the original agreement though.

You also have the right to cancel if the seller just doesn’t provide the goods or service within a ‘reasonable’ time. You shouldn’t have to wait months but sellers often don’t specify a time limit for delivery and defining what is ‘reasonable’ can be tricky.

Which? says: ‘If goods you’ve ordered are taking too long to be delivered, write to the supplier telling them that, under the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, you believe them to be in breach of contract for not delivering goods to you within a ‘reasonable’ time. What constitutes a ‘reasonable’ depends on what you have ordered, but if you buy items over the internet, or by phone or mail order, there are special rules that say you must receive your order within 30 days, unless agreed otherwise.

In your letter, say you are now ‘making time of the essence’ and give the supplier a reasonable deadline to deliver the item. Be aware that even if the supplier said that they would deliver within a set time frame this is not usually part of the contract.

If the item is not delivered within the deadline you have set, write to the supplier again saying that you are cancelling your contract and want a refund.

If the supplier says that you can’t cancel, or won’t give you a refund, you may be able to take them to the small claims court, if the amount you’re claiming is less than £5,000 (England and Wales only).

How to avoid getting trapped in the first place

First and foremost, don’t buy. Close the door, hang up the phone or walk away. Goods that are sold by cold calling and door-to-door selling are not goods you want.

If you do want to buy then take the contract away with you and read it over. This not only gives you some time to think but gives you the cooling off period that you wouldn’t get if you signed on the spot. Read the small print. Everyone says it but nobody does it so be the exception to the rule and be savvy about what you’re buying. When buying online you will often have to scroll through some detailed terms and conditions and tick a box confirming that you have read them.  It is always tempting just to tick anything to get through to the next screen, but safer to read what they are so keen for you to sign up to.

Never ever give away your bank or credit card details or passwords and avoid signing random documents, you never know if your signature could fall into the wrong hands.

If you’re shopping online or via mail order you should be wary of companies with a PO Box number. Make sure you know the full address (and ideally the contact phone number) of the company you’re buying from, especially if you are paying in advance.

Always keep the confirmation email you receive after you have placed an order.

Bear in mind that you will not be able to get out of contracts:

  • That have legally-binding conditions
  • That have been individually negotiated
  • That are between businesses
  • That are between private individuals
  • That are not consumer contracts, e.g. relating to employment or setting up a business
  • That were entered into before 1995.

Useful links

  • Consumer Direct

Experian Free Credit Score – MPU

WHAT DO YOU THINK?

2 thoughts on Unfair contracts and how to avoid them

  1. Hi i signed a contract with a personal training company, but before i sign the cotract they asked me to make a deposit of £300 and i said i dont have the money because i’m unemploye, but the man insist and he said if i can borrow the money of a friends or family. i said i will try and get £150. the agreement is for 6 month. I didn’t really have that much time to read the agreement properly because the meetig was taking place at the reception in the gym, too much noises. He stated that the first month is free and the second month i;ll pay half of the full price if i stayed, so i thought that during the first month of the agreement i can quit, so i quited beccause i had no transportation money and lunch money to be able to carry on working, i explained all my situation on te day of the interview but he wouldn’t let me quit.
    he said if i quit i still have to be paying the renting fees for 6 month which is £550 a month.
    any help please because i/m not paying no money.

    My regards

    Reply

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