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Explanatory Notes
Telemarketing Services Contract
This agreement is designed for use by a company or firm supplying telemarketing services to third parties and consists of a form of agreement and two schedules with details specific to the particular parties together with generic terms and conditions applicable to all similar contracts. Please note that the agreement is intended for smaller companies and it is not suitable for the sale of financial services products. The terms and conditions are incorporated into the contract and do not require the signature of either party. It is intended that the terms are not to be subject to pre-contractual negotiation. However should this be necessary for commercial reasons, care should be taken to ensure that the revised terms are approved in writing by both parties before being attached to the contract. Where the terms are revised and sent out for the first time to a client who has previously dealt with the company on superseded terms it is prudent to draw the attention of the client to the fact that the terms have been revised. These terms are drafted from the perspective of the company. Text in italic script and/or within square brackets must be reviewed and amended before execution. Form of Agreement Briefly this identifies the contractual parties and states that the binding contract is the form of agreement together with the terms & conditions and the two schedules. The schedules set out details as to the scope of the services to be provided and the liability of the client to pay the company's fees and expenses. To minimise uncertainty and thus reduce the risk of a dispute it is important that care is taken by both parties to describe accurately and fully, in schedule 1, the scope of the services to be provided. Where there are any other matters specific to the particular contract they should be added here as appropriate. The form of agreement specifies a "commencement date" from which the company is to provide the services and the duration of the contract (which may be extended by written agreement as provided for at clause 2.2 of the terms & conditions). Terms & Conditions Clause 1:
States that the scope of the services to be provided are as set out in schedule 1. Additional services are to be agreed in writing along with any consequent fee adjustment. Clause 2:
This clause specifies the date from which services are to be provided and the initial duration of the contract. The parties may agree to change the commencement date and/or the contract's duration. The services are to be provided during the company's specified working hours. Clause 3:
Fees and expenses are payable by the client and are to be set out at schedule 2. Provision is made for payment of interest at the statutory rate on outstanding invoices. This is at present some 8 per cent above Bank of England base rate. In addition the company may choose to exercise its right to terminate the contract where the client fails to pay fees and expenses on time (see clause 9.1). Note the provisions of clause 3.6 which sets out a mechanism allowing the company to increase its rates on 30 days notice at the end of the initial period with a corresponding right for the client to object and terminate the contract within 14 days of the company's notice of fee increase. Clause 4:
Here the client agrees to ensure that data supplied to the company to enable it to provide the services will be accurate. The client further agrees to indemnify or recompense the company should it suffer any loss as a result of data provided by the client. Clause 5:
This clause sets out the standard of care expected of the company and the consequences of a breach of that standard of care. Note that two separate issues are dealt with here: first breaches that have commercial consequences alone where the company is not liable for loss (but where the client may choose to terminate for breach of contract) and secondly those that put the client in breach of its legal/regulatory obligations where the company is liable to the client (the extent of that liability is dealt with at clause 8.3).
It is important to appreciate that the company in providing the services will be treated by the regulators (e.g. The Office of Fair Trading) as the agent of the client and thus the client will be held liable for any regulatory breaches on the part of the company. The selling of goods and services by telephone ('distance selling') is subject to detailed regulation (we have listed the relevant regulations at clause 5.3) and it is therefore imperative that both parties appreciate the obligations imposed by those regulations. The description of the services at schedule 1 should ensure that where relevant the company's obligations match the corresponding regulatory provisions.
You can find more information on Distance Selling regulations on the OFT website: http://www.oft.gov.uk/advice_and_resources/resource_base/legal/distance-selling-regulations/ Clause 6:
Clause 6.1 obliges the company to provide suitably qualified personnel to carry out the services subject to the right of the company to substitute individuals at will. Clause 6.2 protects the company from the risk that the client may 'poach' the company's employees during the contract and for a specified time after termination. Clause 7:
This provides that reports of marketing activity are to be provided to the client as set out in schedule 1 and that accounts relating to telephone charges and other expenses are to be provided as set out in schedule 2. Clause 8:
Clauses 8.1 and 8.2 deal with the company's liability for loss arising other than through a breach of legal/regulatory obligations: the company's liability is limited to an amount equivalent to the fees payable by the client over a fixed period (we have suggested one week). Clause 8.3 deals with liability arising from a legal/regulatory breach causing loss to the client where the company agrees to indemnify the client against all direct losses. As such losses (including fines and costs orders levied by a regulator) may be substantial and open ended it is important that this clause is not included unless adequate insurance cover is available. Further as such insurance cover will be capped so too must the liability of the company be capped. It is prudent to discuss the details of available insurance cover with your insurance broker before deciding upon the form of clause 8. Clause 9:
Either party may terminate the contract if the other party is in breach and fails to remedy that breach within 14 days or where the other party becomes insolvent. The company may choose to terminate the contract if the client fails to pay fees and expenses on time. Note that the client has the right under clause 3.6 to terminate the contract within 14 days of receiving notice of an increase in fees. Upon termination the company is entitled to payment of all accrued fees and expenses within 7 days. Clause 10:
Where either party is prevented from carrying out its contractual obligations through external matters outside its control that party shall not be in breach of contract provided that it both notifies the other party as soon as it becomes aware of such matters and takes reasonable steps to mitigate the consequences. Clause 11:
This clause gives both parties protection against the misuse/disclosure of confidential information. Exceptions apply where disclosure is necessary for performance of the contract, where confidential information has already been made public and where a party is obliged to make disclosure because of legal/regulatory obligations. Specifically the company agrees not to make use of the client's customer list except when providing the services. Clause 11.2 contains an undertaking on the part of the company to abide by the provisions of the Data Protection Act 1998 relating to the processing of personal data. Breach of clause 11.2 is covered by the indemnity in favour of the client set out at clause 8.3. Clause 12:
A number of terms standard to most commercial agreements are set out here: the arrangements for service of formal notices (e.g. notice of termination); failure to assert a contractual right does not entail an implicit agreement to forego enforcement of that right in the future; an invalid provision does not nullify the contract and is to be replaced with an enforceable provision. Both parties are prohibited from assigning their respective contractual rights/obligations to a third party without the prior written consent of the other (the company may wish to consider allowing itself an unfettered right to assign in which case we set out an alternative wording within square brackets); the agreement consists of the form of agreement, terms and conditions and the two schedules and any other pre-contractual discussions are to not be binding; third parties who may be affected by the contract are expressly excluded from making a claim under the contract. The final paragraph of this clause provides that the contract is to be governed by English law and that disputes that cannot be resolved by mediation are to be determined by the English courts.
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