CASE STUDY:

Contracts and intellectual disability

The complaint

Marjorie contacted us about a disputed mobile contract entered into by her husband, Bruce. Bruce had a medical condition which meant that his ability to understand the implications of entering into a mobile contract was limited. Marjorie said Bruce had been in the telephone company shop for several hours, where sales staff pressured him to enter into the contract, even though she had tried to persuade him to leave. She said the staff had asked her to sign the contract as well, but she had refused.

TIO response

We asked the provider to explain its point of view, including what it believed had happened at the point of sale. The provider said it did not understand why Marjorie had not intervened more assertively, as it did not think its sales staff would have persisted had they known of Bruce’s condition.

The outcome

The provider agreed to cancel the contract without an early termination fee and to write off the outstanding debt. It said Bruce could return his handset or pay the remaining instalments for it. However, the handset had been destroyed in a car accident. We relayed this to the provider and established that in the circumstances, the company would not insist on the return of (or payment for) the handset.

Marjorie also asked whether she could receive a refund for some charges already paid. After further consideration it was agreed that the provider was entitled to keep these payments because there was no evidence it knew of Bruce’s illness until it was approached by Marjorie through the TIO.

Lessons learnt

Providers should train their sales staff to be alert to anything that may suggest the customer does not understand what is happening and to ask appropriate questions of the customer, clarify information, or seek assistance from a supervisor if they have any doubt about whether the customer understood the nature and effect of any contract they entered into. Providers may be required to release a customer – such as where the customer has a special vulnerability or disadvantage – if the provider knew or ought to have known the customer did not understand what the contract was about, or unreasonably pressured the customer to enter the contract.

Family members, guardians and carers who assist people with intellectual disabilities or psychiatric illnesses should act quickly when they identify that something untoward may be happening. The sooner action is taken, the easier it will be to correct the situation.

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