Contracts
If you're thinking of signing up to a new contract, there are a few things you might want to consider first.
For instance:
- Will the amount you pay each month stay the same over the course of the contract?
- Have you checked what the minimum contract period you have been offered is, and what notice period you are required to give to your provider?
- If the terms you agreed to at the outset of the contract change or increase unexpectedly, what are your rights?
This page helps answer these questions.
The price you pay each month is likely to be one of the most important factors in your choice of contract. It may be:
- Fixed - this is a single price which is fixed for the entire term of the contract e.g. £20/month for 24 months.
- Tiered - where you agree to pay different prices at different times, e.g. £10 a month for the first 12 months and £15 a month for the second 12 months. Or £10 a month for 12 months, then £10 plus a percentage increase (for example in line with inflation).
- Variable - where you agree to pay a core subscription price for the fixed term of the contract, but the provider reserves the right to increase the price at its discretion.
No matter what type of contract, the amount you pay each month during the contract should be provided clearly to you before you sign-up.
If your provider increases the prices that you pay beyond what you agreed when you signed the contract, they must give you at least one month’s notice and a right to exit the contract without penalty.
Some providers have contracts which set out that the monthly prices you pay will increase at certain times during the contract, for example increasing by inflation each year. This should be made clear to you when you sign the contract, so you know what you will have to pay at different points in the contract. This is covered in our guidance on contract requirements (PDF, 448.9 KB). If this was made clear at the point you entered the contract, you won’t have the right to exit without penalty when the increase takes place.
Small businesses (with ten employees or fewer) can find out more about price increases and things to consider when taking out a new phone or broadband contract in our checklist.
All businesses are entitled to ask for certain information to be included in their contract in a clear comprehensible and easily accessible form. This can include:
- Information on whether any services might be limited or restricted in any way;
- Details of the minimum service quality levels offered, e.g. the ongoing service quality and initial connection time;
- The customer service and maintenance service that comes with the contract;
- Details on the contract length, the conditions for renewal ; and
- Details of any charges due on termination of a contract (including early termination charges).
If you are a small business consumer (with ten employees or fewer) and considering whether to enter into a new contract, the provider must give you key information about the contract before you sign up.
Before you can give your consent to enter into a contract, you should receive a one-page (three-page for bundled services) contract summary in writing, that includes key information, such as charges, the length of the contract and the process for cancelling. Before you are bound by the contract, the provider must also give you a more detailed set of contract information in writing. Customers can ask to be provided with these in a reasonably acceptable format, such as large print and Braille, if they have a disability. If you're unclear about what you are being asked to agree to, we recommend that you don't sign up until you fully understand the terms of the contract.
Don't forget to consider whether any additional charges apply within the contract you are planning to enter into. These could include costs for additional parts of the service, costs to leave the service early, costs for paper billing, costs for roaming and costs for not providing sufficient notice if you cancel your service or switch provider.
Automatically renewable contracts are contracts that automatically roll forward to a new minimum contract period - with penalties for leaving - unless the customer actively opts out of the renewal.
If you are a small business (with ten employees or fewer) with landline and/or broadband services, your provider is not entitled to renew your contract term automatically - it must obtain your consent for every new minimum contract period you sign up to.
Businesses with more than ten employees should check their terms carefully to see if they are automatically renewable before signing up. Where existing contracts contain automatic renewal terms these businesses may want to contact their provider and discuss the renewing of any minimum contract period.
You should pay particular attention to the length of the contract, or 'minimum contract period' when choosing a service and provider. This is the minimum length of time you must take the services you sign up for.
If you cancel your services before then, you may have to pay early termination charges. These charges could be substantial, and you should check your contract terms and conditions when signing up.
If you are a small business consumer (with ten employees or fewer) the length of your contract should not exceed 24-months and your contract duration should not be extended when you buy additional service, unless you have given consent.
You should also be aware of the notice period you need to give if cancelling or switching your services. If you are switching to a new mobile provider using the Auto-Switch process, your current provider must not charge you for notice period running after the switch date.
Your provider should make sure its conditions or procedures for contract termination do not make it more difficult for you to change provider. This could include, for instance, excessive early termination charges or excessively long notice periods.
Your business contract may come with a service level agreement ('SLA'). Only half of SMEs are aware of SLAs so make sure you check with your provider when signing up.
An SLA will define the terms of the service you are being provided, and outline information about support and resolution of problems. Providers offer packages with improved care levels at a premium price, and different packages may come with different products purchased.
Make sure to ask your provider about SLAs and the level of ongoing service you can expect, as this can be extremely important to your business. SLAs may include such issues as:
- fault repair and installation times;
- the speed of taking action over queries or complaints;
- coverage levels;
- speed of connection; and
- the maximum number of days without service
SLAs can be accompanied by service level guarantees ('SLGs'), and usually have compensation arrangements in place if the SLA is not met.