When we decide to change the company that provides our Gas, electricity or home telephone service, the company we choose will pull us into a contract. The contract period is likely to last for anything from 6 months to 3 years and most companies will encourage us to set up periodical direct debit payment so that we don’t even have to worry about paying the bills.

Then at the end of the contract period we consumers will typically receive a letter from the company informing that the contract is nearly at an end and offering us a new one.  But entering a new one is not always the best way forward. 

A contract locks the consumer into promising to pay for the company’s service for a specified amount of time, while the company promises to provide that service at a specific price and to a specific standard for that same specified amount of time.    

For instance, if you have a contract to pay £10.00 per month for a year, you have promised that company £120.00 and if, after 6 monthly payments, you decide that you want to leave, you could be required to pay £60.00 to be rid of that contract. 

If, at the end of the contract period you decide not to renew the contract it does not mean that you will lose the service.  It may cost you a little more per month, than if you enter another fixed term one, but usually you will be put onto a rolling contract which means that you have the freedom to leave that service provider with just one month’s notice.

This means that if you realise that you are offered the same service costing less with another company you have the freedom to change companies after one month, or if the service received has had its hiccups (mostly this happens with telephone or internet services) you have more bargaining power and the option to move to a more reliable company without having to honour the contract that you would have been locked into.  Most companies want to keep your custom and will appear to try harder to fix any problems, because statistics are very important to them and if they lose your custom, another company will gain it resulting in a double loss for them. 

So, if once your contract period has ended there is a problem with your service, when you are on the phone trying to get it fixed, don’t be drawn into another lengthy contract during that conversation.  Remember that whatever sort` of contract you are on the company have an obligation to maintain the standard of your service and there is a definite advantage to being able to threaten to leave them.

IF, Crofton Park