Stephen, a small business owner, came to us in 2008 with a dispute over a bill of almost $19,000 for overdue charges and the remainder of a minimum service agreement for almost two years of internet services.
His contract was for 24 months worth of internet services, to the value of $19,500. Stephen claimed that unbeknownst to him, the agreement had a clause that allowed the service provider to automatically renew the agreement every two years unless Stephen gave written notification of his intention to terminate the contract within 30 days of its expiry. A failure to do so would result in him owing the full amount of charges until the end of the agreement.
In May 2008, he sent a letter to his service provider notifying it of his intention to cancel the contract as his business was moving premises. However, the service provider did not accept it to be a valid termination as it had been sent 39 days after his contract had expired, nine days more than the clause stipulated. The service provider requested payment of the outstanding minimum agreement, or $18,700.
Stephen made a complaint through us claiming that the terms of the contract were unfair as it would be unreasonable for him to have to pay the full charges of the agreement and he didn’t have full knowledge of the automatic renewal clause.
Meanwhile, the service provider believed that Stephen was liable for the whole sum as it claimed the automatic renewal clause had been explained and Stephen had signed the agreement in knowledge of this.
The complaint made its way through our whole complaint process without a resolution that was agreeable to both parties.
After considering all the evidence in the matter, the law and best industry practice as per the Telecommunications Consumer Protections Code, the Acting Ombudsman issued a Preliminary View in 2010, recommending the service provider waive the fees as it was evident that Stephen had inadvertently signed up to an unfair contract.
In August 2010, Ombudsman Simon Cohen issued a direction that the service provider waive part of the fees, and recommended it to waive another part of the fees. The service provider complied with both the decision and recommendation.
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