Persons with intellectual disabilities entering contracts

From time to time the TIO receives complaints from persons, or on behalf of persons, with intellectual disabilities who wish to be released from contracts, particularly mobile phone contracts, on the grounds that they were not aware of the implications of their actions in signing the contract.

In investigating such complaints, the TIO seeks to establish the nature of the disability and whether it would have been obvious to the person selling the contract in line with the common law rule that a contract is voidable if:

• the complainant can show that he or she was suffering from such a degree of medical incapacity or disability at the time of entering into the contract that they were incapable of understanding its general nature; and
• the other party was aware, or ought to be have been aware, of this incapacity.

To establish whether the above conditions are met, the TIO obtains statements from the complainant and the telecommunications company representative, plus, where appropriate, medical or other advice to verify the complainant's general condition.

When evidence is presented that verifies that the customer had an intellectual disability which made it impossible for them to understand the contract and that the provider was, or ought to have been, aware of this, the TIO will expect the provider to release the customer from all obligations under that contract.

Even in circumstances where the customer's condition may not have been obvious to the provider, the TIO may still expect the provider to release the customer from some or all contractual obligations. In making such decisions, the TIO will consider what is fair and reasonable in the unique circumstances of each complaint, having regard to the nature of the complainant's condition, any action he or she should reasonably have taken in those circumstances, and the relative costs to both parties.

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