What's in a word - out of contract

I started the week looking at different interpretations of the words 'supplier management', and finished it by exploring interpretations of the use of 'personal care' in the NHS.

Today I'd like to explore interpretations of the words 'out of contract'.

Out of Contract is a phrase often used in my day to day work as The Purchasing Coach between buying and supplying organisations. It usually can be translated as "anything goes". That is what ever terms that have been agreed re volume, price, delivery and payment may no longer apply. That is both parties can continue to do business, acting as if the contract terms apply, but either party can turn around at any point and say "enough is enough, it's out of contract, we no longer wish to do business on those terms". Often at very short notice.

I was surprised however when BT used this phrase when I questioned who was responsible for paying for the replacement router in my home office. That is it seems I am responsible for the paying for the replacement because "the services are out of contract".

An interesting use of words - for me the services are still in contract - I pay an agreed fixed fee per month for the given service which includes the phone calls, wifi and router. The router is an essential part of that service provision and yet because I'm "out of contract" I can get the phone calls and wifi at the same price, but not the router through which I access the service.

Which led me to ask about renegotiating the contract so we started a new contract with a new router provided by BT, but was told there would be a fee to do that. A fee that would be greater than the cost of the replacement router!

In more equal power settings I might have continued the negotiation - after all if we're out of the contract I have no obligation to use their services, in the same way as they have no obligation to provide me with a new router free of charge. (A friend reminded me she was in a similar situation with TalkTalk when they were in breach of contract, but tried to impose a £350 early termination fee!)

I didn't read the fine print when I entered into the contract with BT, nor did my friend with TalkTalk. Certainly not as much as we both would when doing our day job for organisations. If I had read them then I would have understood:

• The services being provided
• The cost elements for that service provision
• Obligations of both parties 
• Circumstances of breach - for both parties
• Liabilities associated with breach
• Implication of any initial 'free' service provision - ie warranty period for 'free' router and costs once out of warranty
• Contract expiry date
• Terms to be applied after contract expiry
• Notice period - within and outwith the contract period 
• Fees incurred for early termination
• Fees incurred to transfer the service at termination  
• Notification requirements - for both parties     

A great reminder why it's useful to understand what terms apply at the start of any service provision - rather than find out when you're on the back foot and something has gone wrong - at work and home!

Alison Smith

The Purchasing Coach

Inspiring Change Inside and Out (more here on why that's important)