Contract with Childrens Nursery

baldyj

I entered into contact with a nursery in July for my daughter to start attending in September. In the contract it states that prices are reviewed every September, and that any changes to the prices will be notified with one months notice.


On the 1st August notification was apparently given via text message (I did not receive this and have only found out in the last few days) that the price of my daughters care is to increase by 21.5% effective 1st September!


I have requested to terminate the contract as I don’t wish to pay this, but have been greeted with a response that my contract cannot be terminated in the three months preceding or three months commencing my daughters start date (this is stated in the contract along with the fact that after the first three months the notice period reduces to one month)!


What I don’t understand is that whilst the contract states one months notice will be given of any price change, it doesn’t state any recourse for if you’re not willing to accept the change!


I would assume that the notice period of price changes is one month so that you can exit your contract with one months notice prior to new charges coming into effect?


If this is the case then should I not be able to exit the contract with one months notice, as opposed to being forced to pay the new charges for three months?


Also I’m sure that the price increase would have been known to management at the time of signing the contract, and so by not telling me I feel like I have been somewhat hoodwinked!


Any thoughts/suggestions that could help would be appreciated.

unholyangel

Covered by unfair contract terms.

OFTs guidance is available here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284426/oft311.pdf

A few parts may be of interest. Namely:

Schedule 2, paragraph 1, states that terms may be unfair if they
have the object or effect of:
(l) providing for the price of goods to be determined at the time of
delivery or allowing a seller of goods or supplier of services to
increase their price without in both cases giving the consumer the
corresponding right to cancel the contract if the final price is too
high in relation to the price agreed when the contract was
concluded.

12.1 The OFT's objections to variation clauses generally are set out under Group
10. If a contract is to be considered balanced, each party should be sure of
getting what they were promised in exchange for providing the
'consideration' they agreed to provide. A clause allowing the supplier to
increase the price – varying the most important of all of the consumer's
contractual obligations – has clear potential for unfairness.

12.2 Any purely discretionary right to set or vary a price after the consumer has
become bound to pay is obviously objectionable. That applies particularly to
terms allowing the supplier to charge a price on delivery of goods that is
not what was quoted to the consumer when the order was placed. It also
applies to rights to increase payments under continuing contracts where
consumers are 'captive' – that is, they have no penalty-free right to cancel.

12.3 A price variation clause is not necessarily fair just because is not
discretionary – for example, a right to increase prices to cover increased
costs experienced by the supplier. Suppliers are much better able to
anticipate and control changes in their own costs than consumers can
possibly be. In any case, such a clause is particularly open to abuse,
because consumers can have no reasonable certainty that the increases imposed on them actually match net cost increases.29

12.4 A degree of flexibility in pricing may be achieved fairly in the following
ways.30
• Where the level and timing of any price increases are specified (within
narrow limits if not precisely) they effectively form part of the agreed
price. As such they are acceptable, provided the details are clearly and
adequately drawn to the consumer's attention.
• Terms which permit increases linked to a relevant published price index
such as the RPI are likely to be acceptable, as paragraph 2 of Schedule
2 to the Regulations indicates, subject to the same proviso.
• Any kind of variation clause may in principle be fair if consumers are
free to escape its effects by ending the contract. To be genuinely free
to cancel, they must not be left worse off for having entered the
contract, whether by experiencing financial loss (for example, forfeiture
of a prepayment) or serious inconvenience, or any other adverse
consequences.31

Especially the last section.

The other sections that may be particularly useful are:

6.1.6 Inadequate rights for the consumer. A term can also be unfair if it
undermines the consumer's legitimate cancellation rights. Clauses
frequently state or imply that the consumer cannot cancel the contract in
any circumstances, or only with the supplier's agreement. In law, each
party has a right to end the contract if the other commits a serious breach
of it. A term that purports to rule out all possibility of cancellation by the
consumer is potentially misleading and unfair.

10.1 A right for one party to alter the terms of the contract after it has been
agreed, regardless of the consent of the other party, is under strong
suspicion of unfairness. A contract can be considered balanced only if both
parties are bound by their obligations as agreed.
10.2 If a term could be used to force the consumer to accept increased costs or
penalties, new requirements, or reduced benefits, it is likely to be
considered unfair whether or not it is meant to be used in that way. A
variation clause can upset the legal balance of the contract even though it
was intended solely to facilitate minor adjustments, if its wording means it
could be used to impose more substantial changes. This applies to terms
giving the supplier the right to make corrections to contracts at its
discretion and without liability.

And theres a lot of text for the next one (and my post is far too long already) so i'll just quote the title and if you use ctrl&f on the document above, you can search for it in the document:
Group 18(a): Allowing the supplier to impose unfair financial
burdens

baldyj

Thanks very much for this - I really appreciate it.


I think I'll pick out bits of this to quote in my email to the nursery.

bod1467

Bottom line - if you haven't paid them anything yet, and you don't use the service, then they only way they can try to get any money out of you is by suing you in the small claims court.

And as per above, they'd be on very shaky ground trying to win any such claim.

The term contra preferentem also applies to consumer contracts - namely, if there is any ambiguity or dubiety in a contract term, then the definition favouring the consumer takes preference.

bris

No chance of them winning, 21.5% increase is way, way over the limit to avoid the unfair contract clause.

Just stand your ground and they would be laughed out of court.

pinkshoes

Looking at the bigger picture here, are there other nurseries in the area that can now take your child at such short notice?

I.e. Not only have their put their fees up a ridiculous amount, they have now put you in a position where you have limited time to find somewhere else.

If this is the case, then I'd be wanting to take the place for the minimum 3 months as agreed, but only paying the agreed price. This would give you far more time to find another nursery.

If it's anything like the area I live in, then good nurseries have quite long waiting lists. If they can hike their price so much, then I'm guessing they have limited competition in the area?

bod1467

pinkshoes wrote: »

If they can hike their price so much, then I'm guessing they have limited competition in the area?

Or the nurseries are running as a cartel and all have hiked their prices in unison?

baldyj

The nursery I previously used is now on the other side of the city to me after I recently moved house. When looking for a new nursery there were only two that were local, and we obviously opted for the wrong one!

The other nursery in the area is full, but luckily the old nursery has one space remaining (even though it'll mean extra travel) so I have taken it.

One thing I didn't mention in my previous post is that I have handed over £150 to the nursery (£50 admin fee & £100 "Non-Refundable" deposit which would come off the first bill). I am going to ask for this to be refunded as this massive hike in prices was not mentioned to me when I signed the contract in July, yet it was communicated on the 1st August! They must have know about the increase when i signed the contract.

Also the contract does seem to have gone against a lot of the UTCCRs around the price increase clause:

- It does not state any limits to an increase (and so they could effectively change prices to £1,000/day if they so wish).

- It does not mention how (if indeed you can) end the contract if the new prices are not agreeable.

- They have given one months notice for the price increase, yet my notice period is three months (from my daughters start date), and so runs to mid December, thus forcing me to pay the new prices for three months.

If the nursery were to come back and agree to reduce the prices to what they were previously, would I still be able to walk away from the contract?

My reasoning for this is that the whole issue and the way it has been handled has left a sour taste in my mouth, and so even if they reduced the price I no longer feel comfortable using them.

bod1467

The 1st question you need to address is ... is there another nursery place available for your daughter elsewhere?

halibut2209

Read the post right above yours

wealdroam

baldyj wrote: »

If the nursery were to come back and agree to reduce the prices to what they were previously, would I still be able to walk away from the contract?

My reasoning for this is that the whole issue and the way it has been handled has left a sour taste in my mouth, and so even if they reduced the price I no longer feel comfortable using them.

Surely your reason for wanting to terminate the contract even if they honour the agreed price, is simply because you have already taken out a new contract elsewhere:

baldyj wrote: »

The other nursery in the area is full, but luckily the old nursery has one space remaining (even though it'll mean extra travel) so I have taken it.