Verbal Business Energy Contracts

In today's fast-paced world, business owners must juggle many financial tasks, such as cash flow projections, stock intakes, sales targets, etc. So, when organising the business' utility services, customers constantly look for speed and efficiency, which is why 'over the phone' energy contracts are not uncommon. In one short call,  clients can agree to a change of supplier, a new tariff, or even a multi-year commitment. These are known as verbal energy contracts—agreements made orally between a consumer and an energy supplier or TPI. These conversations are typically recorded and may legally bind both parties to the terms discussed, even without a physical signature or written confirmation.

While convenient, verbal contracts can be a legal grey area for many consumers. Here's what you should know about how they work, the risks involved, and how to protect yourself.

Are Verbal Contracts Legally Binding?

Yes, verbal energy contracts are legally binding in the UK, providing they have not been mis-sold. This means that the sales agent on the phone should have provided you with:

A clear offer 

The sales agent setting up your contract over the phone should provide you with a clearly outlined offer and not give any false or misleading information about the contract you agree to. 

Transparent terms

All information, such as contract length, exit fees, and rates, should be communicated over the call before agreeing to the terms of the contract. At this point, you should also ask any questions you have on the contract, and the sales agent should be able to answer these honestly and clearly so that you have full clarity before entering into the agreement. 

Time to consider

The agent on the call should not pressure the customer to agree to the contract on the spot or within that one call. 

Clear Acceptance

The customer should provide clear acceptance over the phone that they agree to the contract, instigated by a sentence from the agent such as 'Do you agree to these contract terms?'

Written confirmation or call recordings 

After the call, the supplier or TPI should provide you with written confirmation that you have entered into a verbal agreement. Alternatively, the call should be recorded as evidence of the agreement and terms accepted. 

Common Problems with Verbal Contracts 

Misunderstanding- All information relating to a legally binding contract is received verbally, which does not always guarantee that the customer has understood all of the facts before agreeing. The sales agent could also be at fault if they have not relayed all important information on the call or have done so in a confusing manner. 

Feeling pressure- Naturally, in a verbal conversation, the customer may feel more pressured to respond quickly compared to being presented with written information that they can peruse and respond to in their own time. 

Problematic on an organisational level- Although verbal contracts are viewed as a quick solution, they can cause time-consuming complications if more than one board member or authoritative person is required to sign off on agreements. If an organisation finds out that one team member has verbally agreed to a contract without wider consent, it can take some time to reconcile these issues with the supplier. 

Lack of evidence of the agreement- If a customer does feel that they have been mis-sold a verbal agreement, it can be challenging to present proof of this claim. OFGEM requirements outline that only the 'scripted interaction between the seller and buyer' should be recorded, which means that suppliers are not legally obliged to record the entire call. This can be problematic, as often most of the mis-selling occurs in the lead up to the 'contract script'.

What should I do if I've been mis-sold a verbal energy contract?

If you feel that you have been mis-sold a verbal business energy contract, Purely Energy may be able to assist in evidencing your case to the supplier. We will endeavour to rectify the mis-selling of any energy agreement with any supplier and provide you with new, cost-effective and non-obligatory quotes. 

If your case for your mis-sold verbal energy contract needs to be escalated further, the Energy Ombudsman is a free and easy-to-use dispute resolution service for consumers in the energy sector. You can raise a complaint with them on their website, or by calling 0330 440 1624. 

If you have questions about verbal energy contracts or need help lowering your energy costs, contact us on 0161 521 3400 or Info@purelyenergy.co.uk. 

Alternatively, you can get a quick quote.

Helen Ryan at Purely Energy wrote this article. If you have any suggestions or questions, please get in touch with us.