Comments on: When is a Contract Not a Contract?

By: William Teach

William Teach — Wed, 22 Dec 2004 01:34:28 +0000

I did some asking around, and it seems that most of the other companies, including mine, have extended terms and conditions that would preclude this kind of thing happening for those in advance billing. The T’s & C’s allow for a buyout of the money owed for service to end a contract without penalty. So, in this case, where the provision is that the actual line of service to remain active till the end of the contract, the service is being paid for in advance, so the final month of service under contract is already fulfilled. So, while the customer service database would see the contract as terminated early, the terms and conditions would nullify the penalties, which would have to be fixed manually.

By: Xrlq

Xrlq — Tue, 21 Dec 2004 19:17:55 +0000

PW, I agree that my analogy doesn’t work in the case of a lease that specifically requires the tenant to occupy the property. That strikes me as a rather odd requirement, but to the extent that some leases really do require it for good reason, then yes, an offer to pay the last month’s rent and leave would be an offer to settle. But as to a lease where a landlord threw that requirement in “just because” (or, worse, as a cynical tool to prevent him from signing concurrent leases with any of his competitors), and the landlord was not actually prejudiced by the breach of this silly requirement, then my original argument stands: the tenant has not complied 100% with the letter of the contract, but he has substantially complied, and should not be required to pay damages associated with a material breach. [All this assumes, of course, that you live in a state that generally treats leases as ordinary contracts rather than as conveyances of real estate interests. If you don't, then the lease/contract analogy won't work at all.]

As applied to cellular providers, I’d be hard pressed to come up with any duties of care that Spoons could have owed U.S. Cellular, which might have been breached by transfering his number away. The only result of his “leaving” was that he no longer used their network, thereby freeing up resources for other customers to use. His “landlord” got all of the “rent,” and none of the expenses ordinarily associated with it. Remember, the expectation measure is computed according to expected profits, not net amounts otherwise payable by the breaching party. Thus, by paying the final month’s bill in full, with no deduction to offset U.S. Cellular’s resulting savings, Spoons didn’t just make them whole; he actually overcompensated them slightly.

By: pennywit

pennywit — Tue, 21 Dec 2004 12:56:12 +0000

I pretty much agree with you, but I’ll still take a look at the other side for a moment …

Your comparison in #3 isn’t quite apropos. A number of leases include a clause that requires that the person live on the property during the term of the lease. Part of the reason for this, I think, is because the lessee assumes the duty to care for the property during the lease, and the lessor wants the lessee there to do so. I would argue that the offer to pay the remaining month’s balance constituted not compliance, but an offer to settle the terms of the contract.

What do you think?

By: William Teach

William Teach — Tue, 21 Dec 2004 00:52:04 +0000

Good deal, him getting out of it. While I do not work for them, heck, they aren’t even considered competition for us in NC, this kind of thing gives the whole industry a black eye.

By: Murdoc Online

Murdoc Online — Mon, 20 Dec 2004 18:02:25 +0000

US Cellular problems at Spoons
Need your help/opinion re: commercial dispute Spoons is having trouble with an early termination fee at US Cellular. Though it sounds from his telling that he’s certainly fulfilled the spirit of the contract, I’m not so sure about the letter….

By: Patterico

Patterico — Mon, 20 Dec 2004 17:44:54 +0000

1 ticked-off customer is 10 lost sales . . . unless the ticked-off customer is a blogger with thousands of readers.

By: William Teach

William Teach — Mon, 20 Dec 2004 00:57:16 +0000

nope. I agree with you on those. And, if he was with my company, we would have let him go free, with, at the most, a $10 per line penalty. They cannot stop him from porting out unless he has past due $$. Would need to know his billing dates for that.

By: Xrlq

Xrlq — Mon, 20 Dec 2004 00:50:05 +0000

You missed my point. It doesn’t just go to the terms of the contract, any more than a contract calling for a “hit” on somebody only goes to the clarity of that contract. An illegal contract is illegal no matter how clear it is as to what it calls for. That side issue only addresses the first two objections. Care to respond to the other five?

By: William Teach

William Teach — Mon, 20 Dec 2004 00:33:56 +0000

It goes to the language of the contract. It is based on active service, rather then payment. Even if payment is made for beyond the contract end date with advance billing, if the line is disconnected before the end date, it is breach of contract. It is 2 separate things. Which is rediculous, but there it is. Since my division in the Carolinas just switched to advanced billing, I think I will have to ask how we will deal with this.

By: Xrlq

Xrlq — Mon, 20 Dec 2004 00:16:37 +0000

Fair enough. That would let Spoons himself off the hook, and defeat objections #1 and #2. Care to tackle the rest? Why do you think the rule is legal as to those who signed up post-2003? “Cuz my boss says so” doesn’t count.