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Thread: Big mistake in signing contract - no way out

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    Big mistake in signing contract - no way out

    Finally calmed down a bit.
    A new company opened providing digital phone systems and they contacted me for their corporate clothing. All went well, order completed and delivered and paid for. When I dropped off the order I saw their flyer advertising really good deals on their systems. As we were in the process of moving to new premise I thought this would be great for my Son. I have two Telkom Lines that I just needed to transfer. We have all heard stories of Telkom not having any more lines etc so he went ahead and contacted them. As he is in his first year of business and has no financials he asked if I would help him out and sign for him. I went to their offices and signed the contract. His was in the region of R 1500.00 per month. I mentioned that I was okay as I just needed to transfer my lines. Ever so bubbly and helpful the owner said no problem they would do it for me as this is what they specialise in and for R 300.00 a month I could get some great handsets. So this was added on bringing the total to about
    R 1800.00. All signed on 28th October and they would install his system November 7th. Delay, delay, delay and informed that Telkom had no ports, as I already have the two numbers so this seemed strange. I called Telkom on the 11th, and not only did they have lots of ports, they would do the transfer the very next day, which they did. Great service from Telkom. I did inform the digital provider on the 11th to cancel my side as I would do it myself.
    This was agreed, and a new contract was to be drawn up. The owner stopped by the office to get my signature on the release forms for the debit order. Big mistake. I was not left a copy. Their flyers state - No long term contracts - with a lot more misleading blurb. I was also assured that at any time we could cancel and they would just uplift the equipment. Numerous calls to them and mails requiring a copy of the actual contract went ignored. I put a stop on the debit order and informed them of this. Having now got their attention, I was told that I am locked into a 60 month contract and I cannot cancel and my credit would be affected by putting a stop and reversal.
    They have still not sent me the amended contract or called me in or visited so I could sign. I do have a copy of the release form and agreement for the debit order.
    I will pay the reversed amounts back, but is there any way I can hold on that until they give me the contract.?
    They were supposed to do a new contract reverting back to the original agreement of R 1500.00 per month and now it is R 1950.00
    He now has a PABX system that could serve the Stock Exchange.
    I did a search on the owner and the company, and lots of trouble there. Court cases aplenty, even a Lawyer and one of the victims replied to me and he is in a worse situation than myself and he has not been able to do anything about it except pay. I am not sure if I can mention the name, but I really think people need to know about them.
    Thanks again
    Amanda

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    Silver Member Greig Whitton's Avatar
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    First things first, you need to get a copy of the contract and find out what exactly you have bound yourself to. In terms of Section 50 of the Consumer Protection Act, suppliers have a legal obligation to provide consumers with a free copy of any written agreement. This provision may not apply depending on whether you signed the contract in your personal capacity or not, but either way I would be surprised if there weren't comparable common law obligations and/or other applicable legislation (e.g. Promotion of Access to Information Act). Bottom law: I can't see how your supplier can legally deny you access to the contract that you signed.

    Withholding payment is a different story altogether and almost certainly constitutes a breach of contract (although, ironically, this can't be verified without a copy of the contract). As tempting as it may be to withhold payment as leverage until your supplier provides you with a copy of your contract, you may be treading on very thin legal ground here. I strongly recommend consulting with a trusted attorney before you embark on that course of action.

    It's not clear from your post whether you want to cancel the contract or not, but assuming you do I recommend parking that for now until you have a copy of the contract.

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

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    Diamond Member Justloadit's Avatar
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    In what manner can one be skating on thin ice in with holding payment?

    IMHO There is quite a procedure to follow before anyone can black list you, and that requires going to court, which of course will then require the contract to be handed over as part of the litigation. If there are any terms in the contract which are not according to the CPA, there is grounds for a case. I am sure our learned friends in law will have a comment.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
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    Diamond Member HR Solutions's Avatar
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    Eish ............. I would name and shame so that we can all know who these con artists are. People like this should not be allowed to get away with this.

    Just a little tip (I know it is too late for this one) .... but I NEVER sign a stop order EVER !!!! If a company won't accept this I go somewhere else !
    I am happy to go to my bank and do our own debit order where I can stop it whenever I want to.
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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by Justloadit View Post
    In what manner can one be skating on thin ice in with holding payment?
    If payment is required in terms of a legally binding agreement, then withholding that payment may constitute a breach of contract and be subject to any penalties provided for in the agreement. To the best of my knowledge, failing to provide a copy of a legally binding agreement does not render the contract null and void.

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

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    Diamond Member HR Solutions's Avatar
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    If you haven't been given the contract - I would also withhold payment. A contract is a two way thing - both parties must agree and be happy with the contract. As JL says above - there is a long procedure for them to go thro to try to get their money...
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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by Gemais View Post
    I do have a copy of the release form and agreement for the debit order.
    I assume the debit order agreement and the service agreement are two separate documents. Is this correct?

    When signing these agreements, did you do so in your personal capacity or is your business party to the agreements?

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

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    Diamond Member Justloadit's Avatar
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    Quote Originally Posted by Greig Whitton View Post
    If payment is required in terms of a legally binding agreement, then withholding that payment may constitute a breach of contract and be subject to any penalties provided for in the agreement. To the best of my knowledge, failing to provide a copy of a legally binding agreement does not render the contract null and void.
    I accept your statement, however, if they company does not provide the agreement, then one can state that there is no agreement until the original is produced. Once the original is produced, then a copy can be made. Until such time I would with hold payment, however I do keep the money in a separate account, so that when all is cleared, the money is used to catch up the back payments.

    How else can you get a copy of the contract?
    Instituting legal action to get a copy of the contract will cost money. With holding payment, costs nothing, and forces the hand.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

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    Silver Member Greig Whitton's Avatar
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    Quote Originally Posted by Justloadit View Post
    I accept your statement, however, if they company does not provide the agreement, then one can state that there is no agreement until the original is produced.
    Yes, you could claim that an agreement doesn't exist. But that won't change the fact that an agreement actually does exist and that withholding payment in terms of that agreement may be unlawful.

    Quote Originally Posted by Justloadit View Post
    With holding payment, costs nothing, and forces the hand.
    In most cases, withholding payment - while potentially unlawful - probably would resolve the situation by forcing the supplier's hand. However, in a worst case scenario, it could backfire. Let's say the supplier uses non-payment as an excuse to claim breach of contract and sue for damages. It goes to Court and OP claims that the supplier never provided a copy of the contract. The supplier lies and claims that a copy was provided before producing the original, signed agreement. Court confirms that OP was legally bound by this agreement before breaching it, and rules in favour of the supplier.

    Remember: from the OP's point of view, this dispute may only be worth ~R1,500 (i.e. the debit order that she reversed). But from the supplier's perspective, this is worth ~R100K (60 month contract X ~R1,500 per month). Per OP, this supplier has a history of legal battles. For all we know, the supplier may deliberately be withholding a copy of the contract to goad OP into withholding payment so that they have an excuse to sue. I've seen crazier scams.

    I'm not saying that OP shouldn't withhold payment. I'm just saying that doing so may be unlawful and may make a bad situation even worse. If she knows that the supplier has a history of legal battles, then it would be prudent to seek counsel from a reputable attorney before embarking on a course of action from which there may be no return.

    Founder of Evergrow - Helping South African business owners grow their business without the growing pains

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    Platinum Member sterne.law@gmail.com's Avatar
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    Most contract issues involve many issues.
    Unfortunately withholding payment is considered self help.
    Withholding payment is inevitably breach. Of course one argument is to say I don't have a contract.
    If in doubt, or to be safe, one could write and inform that the money will be paid into a lawyers trust account. Although this is still a breach, it is mitigated.
    If the contract was concluded in a personal name then the CPA is in effect (even if a business, if revenue is below the thresh hold and you trade as sole prop or partnership, its as if a person). Therefore you can cancel and only a reasonable cancellation fee can be charged.
    Can the contract be cancelled?
    The delay could be grounds for a cancellation, but you have taken delivery.
    There is possibly a misrepresentation.

    If the contract is breached what can Jack the crook claim? Ordinarily to be placed in the position he would have been placed in.

    Arguably the real answer lies in what you dealt with. I am guessing the PABX was supplied and your monthly fee is a form of financing?
    Therefore if there is a credit agreement, are they registered etc, etc. (Penalty clauses can bring an agreement into the fold of a credit agreement)
    If I read the post correctly, it is not that you want to cancel the contract, merely to pay the newly agreed amount?
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

  12. Thank given for this post:

    Gemais (05-Dec-14), Greig Whitton (02-Dec-14), Justloadit (02-Dec-14)

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