Shell Energy - New Fixed Tariff with pending sale of business

FrankMT

I see. Point taken: we are talking about the new contract.

But supplier X chooses to take on the contract.  If they choose to take on the new contract, then they should be held to it. I, the customer, have not chosen to be with the new supplier or agreed to their terms. So why am I held to it?

If a supplier company collapses, Ofgem appoint a new supplier.  But they are not held to the terms of the contract the customer had with the failed company. Ofgem's website says:

Your new supplier will start you off on a special ‘deemed’ contract. These can be more expensive, so your bills could go up, but Ofgem will try to get the best possible deal. You’re not locked into the deemed contract – you can change tariff or supplier at any time.

When your new supplier contacts you
Ask your new supplier to put you on their cheapest tariff, or shop around and switch if you want to. You won’t be charged exit fees.

How is this different (from the consumer point of view) from the situation where a supplier chooses to sell their business to a new supplier? 

molerat

This situation is completely different to a failed supplier scenario, there is no new contract.  The new supplier will take on the existing contract under the existing terms (although there may be some generally minor inconsequential changes).

CSI_Yorkshire

FrankMT said:

I see. Point taken: we are talking about the new contract.

But supplier X chooses to take on the contract.  If they choose to take on the new contract, then they should be held to it. I, the customer, have not chosen to be with the new supplier or agreed to their terms. So why am I held to it?

Your position was that there was no new contract because the parties had not both agreed.  That's a legitimate point of view, and commonly accepted, that both parties must consent before a contract can start.  That means that they shouldn't be held to anything until you have also agreed.

It all hangs on one assumption.  That purchasing a company automatically infers consent by the new owner to all existing contracts of that company.

If it is, then your position is consistent.

If it isn't, then your position would also infer that the purchasing (new) supplier is free to choose not to consent to any existing fix of any customer and, therefore, the contract for that fix is null and the deemed contract rules should apply.

I'm not au-fait enough with mergers and acquisitions to know whether the assumption is true or false.   Purchasing a house doesn't mean you inherit or consent to the previous energy supply contract at the house, but I don't think that's the same thing.

There is also the slight spanner that taking energy is deemed in many circumstances to be consenting to a supply contract with the supplier - so if you have used any energy since the moment of the company purchase you could be deemed to have consented by action.

[Deleted User]

Supplier failures, and supplier sales and takeovers are totally different things. When a supplier goes bust, Ofgem has a legal process which allows it to transfer a supply to an appointed Supplier of Last Resort. A sale or merger of a company is a totally different thing: it is a business transaction. As per the Octopus terms and conditions:

1. We may transfer, subcontract, assign or novate any or all of our rights (including the right to recover the charges) or obligations under the Contract without your consent, but this will not affect your rights under the Contract.

I struggle to understand how even a lay person could fail to understand that Octopus has the right to transfer my existing supply contract WITHOUT my consent. All suppliers have similar legal clauses in their contracts. 

Given that the sale of Shell Retail has been openly discussed now for many months then why would anybody stay with them if they have concerns about a potential buyer?

CSI_Yorkshire

[Deleted User] said:

Supplier failures, and supplier sales and takeovers are totally different things. When a supplier goes bust, Ofgem has a legal process which allows it to transfer a supply to an appointed Supplier of Last Resort. A sale or merger of a company is a totally different thing: it is a business transaction. As per the Octopus terms and conditions:

1. We may transfer, subcontract, assign or novate any or all of our rights (including the right to recover the charges) or obligations under the Contract without your consent, but this will not affect your rights under the Contract.

I struggle to understand how even a lay person could fail to understand that Octopus has the right to transfer my existing supply contract WITHOUT my consent. All suppliers have similar legal clauses in their contracts. 

Given that the sale of Shell Retail has been openly discussed now for many months then why would anybody stay with them if they have concerns about a potential buyer?

The argument was not that this clause did not exist in the contract.  The clause was specifically quoted.

The argument was that this clause could represent an unfair term and, therefore, that a customer could not be held to it.

You are struggling to understand the wrong point.

[Deleted User]

CSI_Yorkshire said:

Dolor said:

Supplier failures, and supplier sales and takeovers are totally different things. When a supplier goes bust, Ofgem has a legal process which allows it to transfer a supply to an appointed Supplier of Last Resort. A sale or merger of a company is a totally different thing: it is a business transaction. As per the Octopus terms and conditions:

1. We may transfer, subcontract, assign or novate any or all of our rights (including the right to recover the charges) or obligations under the Contract without your consent, but this will not affect your rights under the Contract.

I struggle to understand how even a lay person could fail to understand that Octopus has the right to transfer my existing supply contract WITHOUT my consent. All suppliers have similar legal clauses in their contracts. 

Given that the sale of Shell Retail has been openly discussed now for many months then why would anybody stay with them if they have concerns about a potential buyer?

The argument was not that this clause did not exist in the contract.  The clause was specifically quoted.

The argument was that this clause could represent an unfair term and, therefore, that a customer could not be held to it.

You are struggling to understand the wrong point.

Is it an unfair contract term for a supplier to sell or assign a consumer debt to a third party? The consumer has agreed to a sale/merger without his consent by signing up for the tariff.  That said, if someone wants to test it in a Court of Law then so be it.  I await the outcome with interest.

Edit: the word ASSIGN appears to have significant legal meaning when existing contracts are sold on.

‘When do you use an assignment agreement to transfer a debt or obligation?

The only way to transfer your rights or obligations is by an agreement signed by all three parties.  This is the thrust of the argument that not to do so is unfair but read on: 

But what happens if you are a service provider selling your business with tens of thousands of customers? You can hardly ask every one of them to sign up to their own separate novation.

In practice, a well drawn original agreement will contain a provision which permits the service provider to assign (transfer its contract) without the permission of the customer.

But what happens if it does not?

In practice what happens is that the buyer 'takes a flyer'. The deal is done in the hope that the customers stay with the new owner.

Maybe the buyer obtains an indemnity from the seller to cover their loss if many leave. Maybe the buyer will write to the customers to encourage them to stay. Maybe the customers simply make the next payment and thereby confirm acceptance in law.

In each of those cases, the acquirer will be safe because the customers remain (or become) bound to the terms of the original contract.’

Source: NetLawman

CSI_Yorkshire

[Deleted User] said:

CSI_Yorkshire said:

[Deleted User] said:

Supplier failures, and supplier sales and takeovers are totally different things. When a supplier goes bust, Ofgem has a legal process which allows it to transfer a supply to an appointed Supplier of Last Resort. A sale or merger of a company is a totally different thing: it is a business transaction. As per the Octopus terms and conditions:

1. We may transfer, subcontract, assign or novate any or all of our rights (including the right to recover the charges) or obligations under the Contract without your consent, but this will not affect your rights under the Contract.

I struggle to understand how even a lay person could fail to understand that Octopus has the right to transfer my existing supply contract WITHOUT my consent. All suppliers have similar legal clauses in their contracts. 

Given that the sale of Shell Retail has been openly discussed now for many months then why would anybody stay with them if they have concerns about a potential buyer?

The argument was not that this clause did not exist in the contract.  The clause was specifically quoted.

The argument was that this clause could represent an unfair term and, therefore, that a customer could not be held to it.

You are struggling to understand the wrong point.

Is it an unfair contract term for a supplier to sell or assign a consumer debt to a third party? The consumer has agreed to a sale/merger without his consent by signing up for the tariff.  That said, if someone wants to test it in a Court of Law then so be it.  I await the outcome with interest.

Precisely the debate.

The contract terms say that the supplier can transfer rights without consent or notice, but that the customer cannot.

Some would argue that it's unfair because it's unbalanced, others would say that's how M&A works and there's no other way that company sales would be able to occur.

I'm minded the same way as you - but as you say, an actual legal test would be interesting.

bagand96

FrankMT said:

"How so?" Because the parties to the contract form an important part of the contract. Money isn't everything. As I say, this is all hypothetical, but what if I had an objection to the new supplier on ethical grounds? I entered into a contract with Supplier A, but Supplier B is, say, complicit in human rights violations (for example)? 

I know you're talking hypothetically, but how unethical would a new supplier have to be, considering you'd have willingly entered into an agreement with Shell?!

FrankMT

bagand96 said:

I know you're talking hypothetically, but how unethical would a new supplier have to be, considering you'd have willingly entered into an agreement with Shell?!

Hi, bagand96.

The whole thing is hypothetical: well done for spotting the flaw in my analogy! 😏

The ethical angle was just an example of why a customer *could* object to the assignment of their contract to another company. But it could be any number of things: a bad experience with that company in the past, a poor record of customer service, etc. 

My only question was that, given that possibility, how can "a well drawn original agreement" that contains "a provision which permits the service provider to assign (transfer its contract) without the permission of the customer" be enforceable, given that "the only way to transfer your rights or obligations is by an agreement signed by all three parties"? (Thanks Dolor for your research, there!)

I was wondering if, since Shell are the ones instigating a change to the contract and not me, it might leave the door open for me to consider my options (i.e. see if there is a better deal). It was then I noticed the clause in the contract "without consent", which surprised me, as I have recollections of being asked for my consent in other financial contracts.