Cell Phone Contracts. What You Need To Know.

The CRTC recently announced a new wireless code of conduct for contracts and devices which takes effect on December 2^nd of this year. Wireless customers will be able to cancel their contracts after two years without penalty. Also, carriers will be required to unlock phones after just 90 days into the contract. This means that it will be much easier for customers to switch carriers even if the contract comes with a free or lower-priced subsidized phone. Data roaming charges have also been addressed. While 

travelling outside Canada, customers will be able to purchase SIM cards from local carriers, thus removing the need for data roaming altogether, along with its prohibitive cost.

Even though these changes are welcome news indeed, we should all be aware of the ramifications of signing any contract, whether it be cell phone or otherwise.

A couple of months ago, there was a flurry of outrage with many Telus mobility customers. Telus sent out the following text: “Starting May 1^st, a $.40 text fee will apply to all texts sent from CAN to all non-CAN numbers.” Graciously, their text message was free. To their many customers whose current plan includes unlimited texting within Canada and the U.S., the message was far from free. Many of these affected customers wondered why Telus is able to change the terms of its contract.

Telus, along with the 2 other dominant Canadian mobile service providers, entice customers with free or low-priced cell phones if they sign their contract agreement, typically for the current three-year term. Too good to be true? Not really. The service provider will recoup the cost of the phone in the bundled price over the term of the contract. The contract is normally a pre-printed form, devised and prepared by the service provider. Once the customer signs, it’s binding. It sets out lengthy terms and conditions which are, for the most part, in the service provider’s favour. Customers are generally charged a fee to change their plan unless it’s to pay more for added services. They may also incur hefty termination fees to cancel their contract on top of having to pay their device balance.

The CRTC is the governing agency that oversees the Canadian mobile wireless service industry. Advocacy groups have been lobbying for many years to introduce competition into the Canadian market where cell phone charges and service fees appear out of line with the U. S. and the rest of the world. Incredulously, on its website, the CRTC states: “The CRTC does not regulate the rates, quality of service or business practices of wireless service providers because the market for wireless services is sufficiently competitive.”

It appears nothing will be changing anytime soon with regard to competition. In the meantime, know what you sign. Had those disgruntled customers read their Telus agreement, they would have known that Telus appears to be within its right to apply a text fee, even on existing plans. It has given itself the right to change its terms subject to 30 days’ written notice, with limited exception. But the disgruntled ones may have some hope. There may be a condition within their agreement to cancel without penalty, but the provider will still want the remaining unpaid cost of the cell phone.

Unilaterally changing the terms of a contract just doesn’t ring fair. In law, contracts are a bargain or an agreement to reflect “a meeting of the minds.” Imbalance in bargaining positions has given rise to Courts finding creative ways or equitable remedies to level the playing field. For example, in pre-printed or standard form contracts (contracts of adhesion) where there is ambiguity, Courts often resolve the ambiguity against the maker of the agreement. In addition, Consumer Protection laws do exist. It should also be remembered that corporate arrogance may become a target for class action law suits, even in Canada.

Bottom line…never sign a contract before reading and understanding it and free sometimes just costs too much.

If you are involved in a contract dispute, call me. We have extensive experience in contract law and have successfully resolved many contract cases.

You need someone truly on your side. Why settle for less?

D. Glenn Einfeld is a highly knowledgeable and experienced BC personal injury lawyer and BC motorcycle accident lawyer who has successfully litigated many ICBC claims and other insurance claims, including out of province claims, wrongful death, brain injury, spinal cord injury, whiplash, soft tissue injury, and all other serious injury claims.