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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25440
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I run a small business. 2 years ago I started a mobile phone

Resolved Question:

I run a small business. 2 years ago I started a mobile phone contract for 8 handsets with a company called Business Mobiles. We are just coming to the end of the contact now. They have been a total pain throughout the contact period as the deal included a cash back each month which we have had to consistently chase. When we just called to organise getting a pac code for our numbers to move to another supplier, they have reminded me of a clause in the contract (which I did not notice) which says we have to return all the handsets to them. We don't have most of them now as over the 2 years they have broken and been replaced with other phones! They are saying we have to now pay them the full retail price for new phones! Can this be legal? We were paying £39 per month per handset which means that for each phone we have already paid almost £500 (assuming 1/2 the monthly cost was phone usage). Is there anything we can do?
Submitted: 3 years ago.
Category: Law
Expert:  Joshua replied 3 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

Could you kindly advise the exact wording of the clause in question please if you have it to hand?

Customer:

Ownership of all right, title and interest in and relating to the mobile phone / SIM card shall vest in and belong to
the Supplier at all times (unless otherwise expressly agreed in writing between the Supplier and the Customer).
The Supplier grants the Customer the personal and non-transferable right to possess the mobile phone / SIM card
for the Contract Duration or for a period up until termination of this contract (if earlier) subject to the Customer
complying with the terms and conditions of this contract and any terms of use which may relate to the mobile
phone/SIM card. Unless otherwise expressly agreed in writing between the Supplier and the Customer, at the end
of the Contract Duration (or earlier if this contract is terminated earlier) the Customer shall immediately return the
mobile phone/SIM card to the Supplier in good condition and proper working order (failing which the Customer
hereby agrees to pay the Supplier the full retail price of the mobile phone/SIM on demand). All rights not expressly
granted by the Supplier in this contract are all hereby reserved by the Supplier.

Joshua :

Thanks. Just reviewing...

Customer:

As I said in my question, they are supposed to pay each month an amount as a discount which brings the monthly cost down to £39. We have consistently had to chase this and currently they owe us £1000 in back payments

Joshua :

Thanks. Do you have evidence as to 1) the models of the handsets - hopefully they were all the same for ease? and 2) whether they were replaced due to damage or due to wear and tear just breaking down?

Customer:

The handsets we iphone 4s's 4 x 16 gb and 4 x 64GB - all out of warranty after a year. I have no actual evidence regarding the replacements ... we still have 3 of the 16's and 2 of the 64's ... but in very used condition (as you would expect from a 2 year old handset). 2 were replaced by the individual users after cracked screens, 1 after water damage.

Customer:

If I had taken a 2 year contract from any other supplier the cost would have been the same but we would have owned the handsets!

Joshua :

Thanks. because this is a business contract, unfortunately terms of the agreement will be enforceable although as you say, they appear to be unfair. this is because there is a far lesser degree of protection for business contracts that is the case for consumers because parties to business contracts are presumed to have a higher degree of skill and may require further discretion to negotiate terms which might be considered unfair in a consumer contract. Unfortunately, I therefore consider that the provision will be enforceable if it is contained in the terms and conditions which were supplied to you prior to commencement of the contract however, it does not follow that you a full retail cost of handsets as they claim...

Joshua :

because the provision is very likely enforceable, the company would appear to have a claim against your company for the value of the handsets however, there claim is not for the new retail cost of the handsets; their claim is for handsets of equivalent spec and age at the conclusion of the contract. in addition, if you can demonstrate that any of handsets stopped working for reasons other than damage on the balance of probability, you can potentially offset such cost even further on the basis that you would in these cases owe them for the value of the handset as a non-functional or faulty handset

Joshua :

accordingly, you should have little difficulty in limiting their claim to the value of the handsets commensurate with their age as this is beyond dispute however the extent to which you can further reduce your liability by reference to handsets being faulty would depend upon the evidence you may have available in this respect.

Customer:

Does their failure to pay the agreed montly discount have any bearing?

Joshua :

their claim against you such as it is is of course offset by the monies owed to you under the contract and you have a right to reduce any amount owed by the amount they owe you by way of set off

Joshua :

if the company is refusing to provide PAC codes as a means of love rich to encourage you to pay what is demanded and you wish to retain your numbers then you may consider a complaint to the telecoms ombudsman assuming the company is a member of the scheme in order to resolve the matter and obtain your PAC codes

Customer:

But they are not in breach of their own contract by failing to make the monthly payment ... as we would have been in breach had we failed to make payment

Joshua :

They would appear to be in breach of their contract based on what you say however, a breach of contract does not mean that one party or the other is as a consequence unable to enforce any other parts of the agreement. A breach of contract can result in liability for damages but except for certain major breaches of contract such as misrepresentation as to essence of contract and certain other examples, breach of contract does not mean that the remainder of the contractual provisions are as a result unenforceable.Here, from what you say the company has failed to make payments which it was due to make and consequently owes you money and interest on that money at the rate of 8% and you are within your rights to claim the same however there breach of contract does not mean they cannot still seek to enforce the provision whereby handsets must be returned although of course you can seek to reduce their claim using some or all of the above approaches

Joshua :

Is there anything above I can clarify for you?

Customer:

the 8% interest .... how do I charge that to them? Is that 8% per month that they failed to pay?

Joshua :

It is set in law as statutory interest under s69 County Courts Act and Late Payment of Commercial Debts (Interest) Act for payments that are not made on time.

Joshua :

It is 8% per year unless a different interest rate is expressly provided for in the contract

Joshua :

Is there anything above I can clarify for you any further?

Customer:

Thanks for your help.

Joshua :

A pleasure. If I can assist any further as the situation develops please do no hesitate to let me know.

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with though please reply back to me though.

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