Consumer complaint against Namesco Limited about unfair contract terms

14 July 2005

Complainant: A member of the public
Complaint against: Namesco Limited
Case opened: 14 March 2005
Case closed: 13 July 2005
Issue: Alleged unfair contract terms
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999 (“the Regulations”).

Ofcom received a complaint in relation to a term in Namesco Limited’s terms and conditions.
Ofcom has considered Namesco Limited's terms and conditions.

Clause 3.3 of Namesco's terms and conditions stated that it would make no warranties or representations either express or implied in relation to whole or part of the service and that such warranties were expressly excluded.

Ofcom regarded this clause as potentially unfair under paragraph 1(b) of Schedule 2 of the Regulations as it excluded or limits the legal rights of the consumer.

Namesco has agreed to change the term to:

"3.3 Where the contract is with a Business Customer, all conditions, warranties, terms and undertakings, express or implied, statutory or otherwise in respect of the provision or non-provision of the Service and any other services supplied under the contract are expressly excluded to the fullest extent permitted by law."

Clause 5.3.1 of Namesco's terms and conditions allowed Namesco to increase prices (Local Administration Costs) without prior notification and without giving the consumer the right to cancel the contract.

Ofcom regarded this clause as potentially unfair under paragraph 1(l) of Schedule 2 of the Regulations as it allowed Namesco to increase its prices without prior notification and without giving the consumer the right to cancel the contract if the final price was too high in relation to the price agreed when the contract was concluded.

Namesco has agreed to replace clauses 5.3 and 5.3.1 with a new clause 5.3:

"5.3 The Local Administration Costs charged to the Customer shall remain fixed for the initial term notified to the Customer (“Initial Term”). At least 4 weeks before the expiry of the Initial Term, Namesco Limited shall notify the Customer (at the address supplied by the Customer in the Request, or any subsequent address supplied by the Customer to Namesco Limited) of the forthcoming expiry of the Initial Term and of the applicable Local Administration Costs for any renewal term. If the Customer does not renew the registration, the registration shall lapse. It is the Customer’s responsibility to notify Namesco Limited of any change of address. Namesco Limited shall have no liability in respect of a non-renewal of a registration if the Customer does not renew having received notice from Namesco Limited or if the Customer fails to notify Namesco Limited of a change of address."

Clause 5.6 of Namesco's terms and conditions allowed Namesco to charge interest on unpaid charges at the rate of 4% above the NatWest base rate from day to day.

Ofcom regarded this clause as potentially unfair under: paragraph 1(e) of Schedule 2 of the Regulations as it could require a consumer, who fails to fulfil his obligation to pay, a disproportionately high sum in compensation; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has agreed to change the term to:

"5.6 If the Customer fails to make payment on the due date then Namesco Limited shall be entitled to charge interest (both before and after any judgment) on the amount unpaid at the rate of 4% per annum above the base rate from time to time of NatWest Bank Plc, such interest to accrue on a daily basis from the date that payment is due until the date that payment is made in full."

Clause 6.2 of Namesco's terms and conditions allowed Namesco to impose a cancellation charge on a customer who cancelled a request for registration even if Namesco had not started processing a customer request.

Ofcom regarded this clause as potentially unfair under paragraph 1(e) of Schedule 2 of the Regulations as imposing a cancellation charge even if the processing of the request has not been initiated is a form of unjustified and excessive penalty.

Namesco has agreed to change the term to:

"6.2 NAMESCO LIMITED WILL START PROCESSING THE REQUEST IMMEDIATELY FOLLOWING THE CUSTOMER’S DESPATCH OF THE REQUEST AND THE CUSTOMER THEREFORE AGREES AND ACKNOWLEDGES THAT HE WILL NOT BE ABLE TO EXERCISE ANY RIGHT HE MAY HAVE UNDER LEGISLATION RELATING TO DISTANCE SELLING (DISTANCE SELLING MAY BE FOR EXAMPLE WHERE A CONTRACT IS ENTERED INTO VIA A WEBSITE, EMAIL, TELEPHONE OR OTHERWISE WHERE THE CONTRACT IS NOT ENTERED INTO FACE TO FACE) TO CANCEL THE REQUEST WITHOUT LIABILITY UNDER THE AGREEMENT. HOWEVER THE CUSTOMER MAY STILL CANCEL THE REQUEST IN ACCORDANCE WITH CLAUSE 6.3. IF THE CUSTOMER IS NOT COMPLETELY SURE WHETHER OR NOT TO PROCEED, NAMESCO LIMITED RECOMMENDS THAT THE CUSTOMER DOES NOT PROCEED."

Clause 6.3 of Namesco's terms and conditions allowed Namesco to charge the customer certain fees if the customer cancelled a request for registration even after Namesco had started processing the request.

Ofcom regarded this clause as potentially unfair under regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has agreed to change the term to:

"6.3 Once Namesco Limited starts processing the Request, it may be cancelled subject to the Customer paying Namesco Limited full fees and any Local Administration Costs incurred by Namesco Limited on Customer’s behalf. For the avoidance of doubt, any fees paid will not be refunded."

Clause 7 required the Customer to indemnify Namesco against a range of liabilities or losses as a result of any breach of the Agreement by the Customer.

Ofcom regarded this clause as potentially unfair under Regulation 5(1), in particular because of the imbalance created between the consumer and the supplier, in relation to the width of the exclusion.

Namesco has agreed to change the term to:

"7. If the Customer is in breach of Namesco Limited’s Acceptable Use Policy in clause 14 Namesco Limited may for example be sued for defamation or be prosecuted for obscenity. A Customer who is in breach of the Acceptable Use policy shall indemnify Namesco Limited fully and effectively from all liability, losses, costs (including legal costs) and expenses suffered or incurred by Namesco Limited as a result.”

Clause 8.1 required the Customer to agree that Namesco would not be liable to the customer for any loss of profits, revenue or goodwill under the agreement.

Ofcom regarded this clause as potentially unfair under: paragraph 1(b) of Schedule 2 of the Regulations, in particular in relation to the width of the exclusion; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Clause 8.2 limited the legal rights of the consumer for any loss or damage including reasonably foreseeable damage.

Ofcom regarded this clause as potentially unfair under: paragraph 1(e) of Schedule 2 of the Regulations, in particular inappropriately excluding or limiting the rights of the consumer in contrast to the supplier in the event of total or partial non-performance or inadequate performance by the supplier; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Clause 8.3 described Namesco’s liability to customers. Ofcom regarded this clause as potentially unfair under Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has replaced the whole of clause 8 with a new clause 8:

“8. EXCLUSIONS AND LIMITATIONS
8.1 Namesco Limited will not be liable (whether in contract, tort including negligence, or otherwise) to the Customer for (i) loss or destruction of data, profits, savings or contracts, or (ii) any indirect or consequential loss or damage, costs, expenses or other claims for compensation relating to the use or the inability to use the domain name or in any other way related to or in connection with the provision of the Service.

8.2 Namesco Limited undertakes to use reasonable care in maintaining and monitoring its systems and services, but where it uses such reasonable care, Namesco Limited will not be liable for any damages or losses whether direct or indirect that the Customer may suffer as a result of service or systems failure caused by systems or services under Namesco Limited’s control which result in its systems or services being available for the Customer to use for less than 99% of the time they should be available under the contract. Where such systems or service failure is caused by systems or services not under Namesco Limited’s control, Namesco Limited will not be liable for any damages or losses whatsoever.

8.3 Namesco Limited is not liable for the loss of any emails sent to mailboxes of any configuration or sent from email accounts related services provided by Namesco Limited. Namesco Limited is not responsible for any email stored in mailboxes provided by Namesco Limited. Customer’s only expectation is of preserving email downloaded from mailboxes provided by Namesco Limited.

8.4 Namesco Limited’s liability to a Business Customer under this agreement (including, for the avoidance of doubt, but not limited to the service level agreement and the refund policy) will not exceed the aggregate sums paid by the Customer under the contract.

8.5 Namesco Limited’s liability to a consumer under this agreement (including, for the avoidance of doubt, but not limited to the service level agreement and the refund policy) will not exceed £5,000.

8.6 Namesco Limited accepts liability for death or personal injury caused by its negligence without limit and none of the limitations contained in this clause 8 apply to such liability.

8.7 While Namesco Limited makes regular maintenance updates to its systems, firewalls and services, it is the Customer’s responsibility to ensure that its system is adequately protected from viruses, worms or other disabling devices. Namesco will not be liable for any damages or losses whether direct or indirect that the Customer may suffer as a result of any virus, Trojan horse or other disabling device that affects services or systems, whether under the control of Namesco Limited or otherwise, caused by the Customer’s failure to adequately protect its system.

8.8 The parties expressly exclude any rights of third parties who may otherwise be entitled to enforce the terms of the contract as if they were a party to it.

8.9 Except in relation to clause 6.2, where the services are supplied to a consumer (where “consumer” means any natural person who is acting for purposes which are outside his trade, business or profession for the purposes of this Agreement), the statutory rights of the applicant relating to the use of reasonable care and skill in the provision of the service are not affected by the terms and conditions of the contract. For further information about your statutory rights contact your local authority Trading Standards Department or Citizen’s Advice Bureau.”

Clause 9.1 allowed Namesco to immediately terminate the contract in certain specified circumstances.

Ofcom regarded this clause as potentially unfair under Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has agreed to change the term to:

"In the case of a Business Customer, Namesco Limited shall be entitled to terminate the contract immediately upon written notice if:
9.1.1. the Customer does not pay to Namesco Limited by its due date any sum due;
9.1.2. the Customer breaches Clause 4 of these Terms;
9.1.3. the supply of the Service and/or Additional Services to the Customer may (in the reasonable opinion of Namesco Limited) expose Namesco Limited to the risk of litigation or other civil proceedings;
9.1.4. the Customer commits any other material or repeated breach of this Agreement and, if it is capable of being remedied, fails to remedy such breach within 15 days from the date of the first notice specifying the nature of the breach and requesting its remedy;
9.1.5. where the Customer is a business it becomes insolvent, has a receiver appointed over the whole or any part of its assets, enters into any composition with creditors, or has an order made or resolution passed for it to be wound up or, in the case of an individual or partnership, becomes bankrupt, makes a voluntary arrangement with his or its creditors or has a receiver or administrator appointed.
In the case of a Customer who is an individual, Namesco Limited shall be entitled to terminate the contract immediately on serving written notice if:
9.1.1. the Customer does not pay to Namesco Limited by its due date any sum due;
9.1.2. the Customer breaches Clause 4 of these Terms;
9.1.3. the supply of the Service and/or Additional Services to the Customer may (in the reasonable opinion of Namesco Limited) expose Namesco Limited to the risk of litigation or other civil proceedings;
9.1.4. the Customer commits any other material or repeated breach of this Agreement and, if it is capable of being remedied, fails to remedy such breach within 15 days from the date of the first notice specifying the nature of the breach and requesting its remedy;
9.1.5. the Customer becomes bankrupt, enters into an arrangement with his creditors, or has a receiver or administrator appointed over all or any part of his assets."

Clause 10.2 described the circumstances in which the customer would be able to terminate his Agreement immediately if Namesco Limited were, for example, to cease trading.

Namesco has agreed to change the term to:

“10.2 The Customer shall be entitled to terminate the contract immediately upon written notice if … Namesco Limited becomes insolvent, has a receiver appointed over the whole or any part of its assets, enters into any composition arrangement with creditors, or has an order made or resolution passed for it to be wound up.”

Clause 11.1 stated that neither party would be liable for a breach of its obligations (other than any obligation to pay money) in the event of force majeure and the party had acted reasonably and prudently to prevent and minimise the effect of such causes.

Ofcom regarded this clause as potentially unfair under: paragraph 1(o) of Schedule 2 to the Regulations, in particular obliging the customer to fulfil his obligations where the supplier does not perform his; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has agreed to change the term to:

"11.1 Neither party shall be liable for any breach of its obligations hereunder where the breach results from causes beyond its control ("force majeure") and the party concerned has acted reasonably and prudently to prevent and to minimise the effect of such causes. For the avoidance of doubt, where the Customer suffers a force majeure event, the Customer shall still be liable to pay any charges or fees which become due and payable for services supplied by Namesco Limited during the event of force majeure. For the avoidance of doubt, where Namesco Limited suffers the event of force majeure, the Customer shall not be liable to pay for services not delivered by Namesco Limited."

Clause 13.2 stated that the Agreement formed the entire understanding between the parties and cancelled all previous agreements, understandings or representations.

Ofcom regarded this clause as potentially unfair under: paragraph 1(n) of Schedule 2 to Regulations, in particular limiting Namesco’s obligation to respect commitments undertaken by his agents; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has agreed to change the term to:

"13.2 If any provision of this contract is or becomes illegal, invalid or unenforceable under the law of any jurisdiction, that will not affect or impair:

  1. the legality, validity or enforceability in that jurisdiction of any other provision of this agreement; or
  2. the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this agreement."

Clause 13.3 stated that where any provision of the Agreement excluding or limiting liability became inapplicable or unenforceable then the remaining provisions would remain in force.

Ofcom regarded this clause as potentially unfair under Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has deleted the term.

Clause 14.2 stated that conduct which violated law, regulation or the accepted norms of the Internet community, whether or not expressly mentioned in this Policy, was prohibited.

Ofcom regarded this clause as potentially unfair under: paragraph 1(i) of Schedule 2 to the Regulations, in particular binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has agreed to change the term to:

"14.2 The provisions of this clause relating to Customer’s obligations are intended as guidelines and are not meant to be exhaustive. Generally, conduct which violates law, regulation or applicable code of practice, or which is reasonably considered by Namesco Limited to be offensive, defamatory, blasphemous, obscene, abusive, derogatory, of a pornographic nature or otherwise unacceptable, or which is in breach of data protection and privacy principles, or which infringes the intellectual or proprietary rights of any third party, whether or not expressly mentioned in this clause, is prohibited. Namesco Limited reserves the right at all times to prohibit and/or suspend activities that damage or could potentially damage its commercial reputation and goodwill or that of third parties."

Clause 14.10 stated that Namesco reserved the right to add, delete or modify any provisions of this Policy at any time without notice.

Ofcom regarded this clause as potentially unfair under: paragraph 1(j) of Schedule 2 to the Regulations, in particular enabling the supplier to alter unilaterally the terms of the contract without a valid reason which is specified in the contract; paragraph 1(k) of Schedule 2 to the Regulations, in particular enabling the supplier to alter unilaterally without a valid reason any characteristics of the products or service to be provided; and Regulation 7(1), in particular the requirement to ensure that any written term of a contract is expressed in plain, intelligible language.

Namesco has deleted the term.

On the basis of the above, Ofcom has decided to close the investigation.

It should be noted that Ofcom does not have the power to “clear” terms under the Regulations. Only a court has the power to determine whether a term is unfair under the Regulations. Ofcom is therefore able to consider any further complaints regarding these Terms and Conditions in the light of the evidence presented to it.

Case leader: Marvin Luttrell ( email: marvin.luttrell@ofcom.org.uk)
Case reference: CW/00822/03/05

 

Text published when the case was opened

 

Complainant: A member of the public
Complaint against: Namesco Ltd
Case opened: 14 March 2005
Issue: Alleged unfair contract terms
Relevant instrument: Unfair Terms in Consumer Contracts Regulations 1999.

Ofcom has received a complaint about a term in Namesco Ltd contracts and is investigating whether any terms may be unfair.

Case Leader: Marvin Luttrell ( e-mail:Marvin.Luttrell@ofcom.org.uk)
Case Reference: CW/00822/03/05