Deemed contract

Cardew

joncombe wrote: »

The main problem it seems to me hear is the demand for a £100 (and then £200) deposit. That seems to be on top of energy used and I don't think should be allowed (if indeed it is).

As I said earlier the Gas and Electricity Acts place the energy companies in a position where they are(unwillingly) having to allow an occupant to have potentially several hundred pounds credit, and they don't even know his name.


The deposit demanded is against that credit.


The customer is on a legally binding 'deemed contract' with the supplier and by law must comply with the terms and conditions of that company.

j.a.mcguire

The main sticking points of this issue are that:

* I was not aware of any 'deemed contract' nor is it mentioned in my welcome back to NPower. Or at any point on USwitch. I have never encountered this scenario before, having moved into new accomodation about a year ago. So it seems that unless you go looking specifically for information 'deemed contracts' you won't know that you're entering into any contractual agreement

* Why I should have to have any relationship with the previous supplier at all, and why the new supplier can't say please bill us for consumption from this date and we will bill our customer. It's all electronic anyway, nothing is being physically disconnected/reconnected.

My current situation with the higher tariff is in my opinion an unfair contract. I wonder about the legality of any contract when at no point have I had any agreement with the previous energy supplier, doesn't this energy act contradict contract law?

Consent. A valid contract also requires the parties' consent, which must be free, mutual and communicated to each other. Consent is not free when obtained through duress, menace, fraud, undue influence or mistake.

Bluebirdman_of_Alcathays

j.a.mcguire wrote: »

The main sticking points of this issue are that:

* I was not aware of any 'deemed contract' nor is it mentioned in my welcome back to NPower. Or at any point on USwitch. I have never encountered this scenario before, having moved into new accomodation about a year ago. So it seems that unless you go looking specifically for information 'deemed contracts' you won't know that you're entering into any contractual agreement

Ignorance is no defence. This situation has been around for around 20 years, and was legislated in 1989.

* Why I should have to have any relationship with the previous supplier at all, and why the new supplier can't say please bill us for consumption from this date and we will bill our customer. It's all electronic anyway, nothing is being physically disconnected/reconnected.

And what happens when people "forget" to contact the new supplier? Free energy? No. It currently takes weeks to switch (which is lamentable but not the issue here), during that time the incumbent supplier is buying the energy that you are using.

My current situation with the higher tariff is in my opinion an unfair contract. I wonder about the legality of any contract when at no point have I had any agreement with the previous energy supplier, doesn't this energy act contradict contract law?

The only reasonable alternative would be to disconnect upon leaving a house, and reconnect upon new occupancy. You have entered a deemed contract the moment you used your first KWh of energy - read the Electricity Act 1989 and Gas Act 1986.

System

j.a.mcguire wrote: »

The main sticking points of this issue are that:

* I was not aware of any 'deemed contract' nor is it mentioned in my welcome back to NPower. Or at any point on USwitch. I have never encountered this scenario before, having moved into new accomodation about a year ago. So it seems that unless you go looking specifically for information 'deemed contracts' you won't know that you're entering into any contractual agreement

* Why I should have to have any relationship with the previous supplier at all, and why the new supplier can't say please bill us for consumption from this date and we will bill our customer. It's all electronic anyway, nothing is being physically disconnected/reconnected.

I can see why you are annoyed (possibly more at yourself that the present supplier)

My current situation with the higher tariff is in my opinion an unfair contract. I wonder about the legality of any contract when at no point have I had any agreement with the previous energy supplier, doesn't this energy act contradict contract law?

Consent. A valid contract also requires the parties' consent, which must be free, mutual and communicated to each other. Consent is not free when obtained through duress, menace, fraud, undue influence or mistake.

With respect, you are trying to swim against a riptide. When you switch, the new supplier expects you to be with a supplier that you are switching from. It has to liaise with that supplier and arrange the switch. It is unlikely to want to get into arguments about charges for energy that it has not supplied - particularly, where there is a debt.

You are not going to win the Unfair contract argument as Deemed Contracts are enshrined in law and reviewed periodically by OFGEM:

Schedule 2B paragraph 8(1) of the Gas Act and Schedule 6 paragraph 3(1) of the Electricity Act, respectively, provide that where a supplier supplies gas or electricity to premises or a consumer otherwise than in pursuance of a contract, the supplier shall be deemed to have contracted with the consumer for the supply of gas or electricity from
the time when he began to supply that gas or electricity. Typically a deemed contract will occur where a customer moves into a new property and has not agreed contractual terms
with a supplier who is supplying energy to that property or where a fixed term contract expires and there are no explicit provisions for terms and conditions for the period immediately after expiry.

The charges under Deemed Contracts are also monitored by OFGEM and have not to 'overly onerous'. This is why most suppliers use their Standard Variable Rate.

footyguy

j.a.mcguire wrote: »

Hello, I've just moved into a new property and a few days after moving in I received a letter from the current energy supplier Utility Warehouse addressed to the 'Present Occupier' and a demand for '£100 deposit' to maintain the Gas and Electricity supply. I ignored it.

About 14 days after I moved in, I calculated my energy consumption based on meter readings signed up with NPower as they seemed to offer the cheapest rate for Gas and Electric, which turns out to be about £50 a month.

About a week after that I received a threatening letter from Utility Warehouse with a demand for 'a deposit of £200' otherwise they would take steps within the coming days to fit a Pre-payment meter. I ignored it.

2 weeks after I had signed up with NPower I received my welcome pack with my account number, I had been living in the property for over 4 weeks at this point. I signed up online and entered my account details but my account states 'account closed' and I cannot submit meter readings.

I called up NPower and they told me that it can take up to 6 weeks to activate the account and switch the supply over.

In the meantime they advised that I must pay the existing energy company as even though I have no agreement with them verbal or otherwise, if I am using energy I have a 'deemed contract', and this will mean I have incurred costs with them and will be charged at a higher rate although they are not allowed to charge rates which would be considered 'onerous' whatever the legal definition of that is.

My expectation was that as soon as I had my NPower account, I would supply the meter readings which were taken at the point I moved in, and the meter readings taken today, and pay them whatever money I owed for my energy consumption at the agreed rate. After all, nothing has really changed, it's not like they're physically digging the gas lines up to switch them to another supplier, I would expect it's still the same gas shipper supplying the gas, who would then bill NPower who would in-turn bill me.

Now I find I am in a situation whereby I am obliged to pay the previous supplier at whatever excessive rate they deem fair.

This by any measure would seem to me to be an unfair contract. I am reluctant to enter any agreement with Utility Warehouse due to the nature of their deposit demands alone. What should I do? Can I hold off payment until NPower have taken over?

If the supply to your property does not have a current account holder, and correspondence addressed simply to the occupier suggests it does not, then the supplier may refuse to allow any switch to go ahead.

I suggest you contact the current supplier and get an account set up

As you have been told, as soon as you started to use the supply, you were in a deemed contract. If you think the price is unfair, take it up with the OFT, but as the price is usually exactly the same as the supplier standard tariff rates applicable at the time, I think your claim they are unfair will almost certainly be considered unfounded.

You could also mitigate such charges by contacting the supplier at the earliest possibility and asking if they have a more favourable tariff you could enter into
(but beware of possible early exit fees if you are planning on changing supplier)

Cardew

j.a.mcguire wrote: »

The main sticking points of this issue are that:

* I was not aware of any 'deemed contract' nor is it mentioned in my welcome back to NPower. Or at any point on USwitch. I have never encountered this scenario before, having moved into new accomodation about a year ago. So it seems that unless you go looking specifically for information 'deemed contracts' you won't know that you're entering into any contractual agreement

* Why I should have to have any relationship with the previous supplier at all, and why the new supplier can't say please bill us for consumption from this date and we will bill our customer. It's all electronic anyway, nothing is being physically disconnected/reconnected.

My current situation with the higher tariff is in my opinion an unfair contract. I wonder about the legality of any contract when at no point have I had any agreement with the previous energy supplier, doesn't this energy act contradict contract law?

Consent. A valid contract also requires the parties' consent, which must be free, mutual and communicated to each other. Consent is not free when obtained through duress, menace, fraud, undue influence or mistake.

Firstly the deemed contract provision laid down in the Gas/Electricity Acts.


Secondly you don't have to enter a deemed contract; you simply do not use any electricity/gas until Npower have taken over. Delay your occupation of the house for 6 to 8 weeks!


The deemed contract provision was included for our(the customers) benefit. Do you think companies like giving unlimited credit to someone whose name they don't even know?


Why don't you suggest an alternative way that we can move into a house and immediately start using(but not paying for) gas/electricity. Please don't repeat your suggestion that you contract with Npower to backdate payment from the day you moved in; as


1. What would happen if there was a discrepancy between your meter readings and the outgoing occupant? i.e. you or they lie about initial/end meter readings. Only UW can sort that out.


2. What if Npower don't want you as a customer as you have a bad credit record(they carry out credit checks)

j.a.mcguire

Cardew wrote: »

Secondly you don't have to enter a deemed contract; you simply do not use any electricity/gas until Npower have taken over. Delay your occupation of the house for 6 to 8 weeks!

Not possible as I was moving to the area for work.

The deemed contract provision was included for our(the customers) benefit. Do you think companies like giving unlimited credit to someone whose name they don't even know?

This simply wouldn't be the case if the companies got their act together and expedited the switchover, this is what the legislation should be encouraging, not penalising consumers. There's no physical change here, it's an account number on a computer to say please bill via X instead of Y.

Why don't you suggest an alternative way that we can move into a house and immediately start using(but not paying for) gas/electricity. Please don't repeat your suggestion that you contract with Npower to backdate payment from the day you moved in; as

As an analogy perhaps when purchasing a second hand car, the new owner should continue to pay the insurance premiums at the rate provided by the current insurance provider until the new provider can switch your account over in 6 weeks. A consumer wouldn't accept this from an insurance company, why accept it from an energy provider?

UW are not responsible for supplying the gas, they are a broker for the Gas shipper, much the same as an insurance broker.

1. What would happen if there was a discrepancy between your meter readings and the outgoing occupant? i.e. you or they lie about initial/end meter readings. Only UW can sort that out.

This could happen regardless. You entrust the previous tennant to supply correct readings on their departure, nothing you can do otherwise except digitised meters.

2. What if Npower don't want you as a customer as you have a bad credit record(they carry out credit checks)

Your details aren't changed and you default back to owing the original company? They install a pre-payment meter? They terminate your supply, this is really irrelevant to my argument, credit defaulters exist regardless.

I rang them up, low and behold they're charging me for half a month twice as much as the new supplier will charge although reading all the horror stories on here about NPower I'm wondering if I've made the right choice.

naedanger

j.a.mcguire wrote: »

I rang them up, low and behold they're charging me for half a month twice as much as the new supplier will charge although reading all the horror stories on here about NPower I'm wondering if I've made the right choice.

I certainly wouldn't choose npower ever again.

footyguy

j.a.mcguire wrote: »

I rang them up, low and behold they're charging me for half a month twice as much as the new supplier will charge ....

For 2 weeks, it's not going to cost a lot anyway.

And 50% of not a lot, is even less!

You can probably earn more in possible cashback by following the established process and switching, rather than as another user put it "trying to swim against a riptide"

Cardew

Originally Posted by Cardew View Post

Secondly you don't have to enter a deemed contract; you simply do not use any electricity/gas until Npower have taken over. Delay your occupation of the house for 6 to 8 weeks!

Not possible as I was moving to the area for work.

Perfectly possible - move into a hotel.

The deemed contract provision was included for our(the customers) benefit. Do you think companies like giving unlimited credit to someone whose name they don't even know?

This simply wouldn't be the case if the companies got their act together and expedited the switchover, this is what the legislation should be encouraging, not penalising consumers. There's no physical change here, it's an account number on a computer to say please bill via X instead of Y.


NPower cannot instigate switching procedure until you have moved in. They then have to credit check you, agree with UW that the outgoing and incoming meter readings are the same. Even with the shortest of time taken, there will a period of days/weeks where there will be a deemed contract.

Why don't you suggest an alternative way that we can move into a house and immediately start using(but not paying for) gas/electricity. Please don't repeat your suggestion that you contract with Npower to backdate payment from the day you moved in; as

As an analogy perhaps when purchasing a second hand car, the new owner should continue to pay the insurance premiums at the rate provided by the current insurance provider until the new provider can switch your account over in 6 weeks. A consumer wouldn't accept this from an insurance company, why accept it from an energy provider?


You haven't made a suggestion - the analogy doesn't address the issue.

UW are not responsible for supplying the gas, they are a broker for the Gas shipper, much the same as an insurance broker.

1. What would happen if there was a discrepancy between your meter readings and the outgoing occupant? i.e. you or they lie about initial/end meter readings. Only UW can sort that out.

This could happen regardless. You entrust the previous tennant to supply correct readings on their departure, nothing you can do otherwise except digitised meters.

Digitised meters(smart meters) won't be fitted for years and are not compulsory.

2. What if Npower don't want you as a customer as you have a bad credit record(they carry out credit checks)

Your details aren't changed and you default back to owing the original company? They install a pre-payment meter? They terminate your supply, this is really irrelevant to my argument, credit defaulters exist regardless.

Fitting a pre-pay meter takes many months and involves a court order

With respect you have defined the problem as you see it, but you haven't given a solution.