No connection on a £216,000 cancellation fee

A social care provider (Be Caring Limited) was facing a charge of £180,000 plus VAT to cancel 800 mobile phone connections. A cost imposed by its mobile phone supplier (Blu-Sky Solutions Limited) that ‘would be catastrophic’ and ‘highly likely to result in redundancies having to be made’.

The court held that Blu-Sky Solutions Limited was ‘not’ able to charge an administration fee of £225 per cancelled mobile phone connection, because:

• the clauses relied upon were not incorporated into the contract;
• they were unduly onerous clauses which were not fairly and reasonably drawn to the defendant’s attention; and
• even if the clauses had been incorporated, the administrative charge was a hugely inflated compensation for loss of profit, penal in nature and thus void.

Whilst the care provider was fortunate that the court held the cancellation fees unenforceable, the judge was not influenced by Be Caring Limited’s status as ‘the UK’s largest employee-owned not for profit social care provider’. 

The judge, in this case, was critical of the supplier for not providing a copy of the terms with the order form and for not making it clear that Be Caring Limited would be exposed to a very substantial contractual liability if it chose to cancel. Whilst the judge accepted that “the [standard terms and conditions] were reasonably clearly brought to the defendant’s attention in the order form, the offending clause itself was not and was cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover and extricate”.

This case is a reminder for both parties to be clear whether signing an order form marks the first stage in their commercial relationship or if it concludes their whole contract. If a supplier’s terms and conditions are to be binding on the customer, they must:

• be provided to the customer (in advance of signing any order form);
• clearly apply to the goods or services being purchased (not have an incorrect title);
• make clear that the customer is entering into a legally binding relationship; and
• be easy to navigate.

Case reference: Blu-Sky Solutions Limited v Be Caring Limited [2021] EWHC 2619 (Comm).

For more information

For help avoiding unreasonable fees or to check whether your contracts include all the important terms, please contact Emma Watt.

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