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Valparaiso Univ. Law School

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Monday, April 7, 2014

No Contract! But There Is This Agreement

Cecelia HarperMy student, Cecelia Harper (pictured), recently ordered television service.  The representative for the service provider offered a 2-year agreement, which he said was “absolutely, positively not a contract.”  Learned in the law as she is, Cecelia asked the representative what he thought the difference was between a contract and an agreement.  He wasn't sure, but he did read her what he called "literature," which surprisingly enough was not a Graham Greene novel but the terms and conditions of the agreement, which included a $20/month "deactivation" fee should Cecelia terminate service before the end of the contract -- oops, I mean agreement -- term.  

I have seen said agreement, and it includes the following charming terms:

  • Service provider reserves the right to make programming and pricing changes;
  • Customer is entitled to notice of changes and is free to cancel her service if she does not like the changes, but then she will incur the deactivation fee;
  • Customer must agree in advance to 12 categories of administrative fees that may be imposed on her;
  • Service provider reserves right to change the terms of the agreement at any time, and continued use of the service after notice constitutes acceptance of new terms;
  • An arbitration clause that excludes certain actions that the service provider might bring; and 
  • A class action waiver

If the agreement had a $20/month deactivation fee in it, I could not find it.  All I see is a deactivation fee of "up to $15."  Rather, the "customer agreement" references a separate "programming agreement," and suggests that there are cancellation fees associated with termination prior to the term of the programming agreement.

So in what sense is this not a contract?  My guess is that this is service providers trying to emulate what cell phone service providers have done with their "no contract phone" campaigns.  For example, there's this one:

 

I'm guessing that the television service providers have learned that these ad campaigns have made "contract" into a dirty word.  They are now seeking to seduce new customers by insisting that they do not offer contracts.  Oren Bar-Gill will have to write a sequel to his last book and call it Seduction by Agreement.

If anyone has any other theories for why representatives for service providers are insisting that their contracts are really agreements, please share!

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