Cali Judge rules early termination fees for cell phones illegal.

['97ventureowner]

Imagine the impact if this spreads across the country. http://tech.yahoo.com/blogs/null/99655

[Mr3GTP]

I'd love to see this spread out.


You can bet it'll be challenged by the wireless industry though, so I'm not counting my chickens yet.

[drunken monkey]

How did the Judge come up with this?
If it's written in the contract that there is a termination fee, then how is it unlawful/illegal?
Part of basic contract law: Contracts do not have to fair.

As is pointed out, it is the fact that you are bound to a network for the length of the contract that gives us "cheaper" immediate access to certain phones. If there was no minumum term, all that would mean is that the basic handsets would cost more.

['97ventureowner]

Just think if this sticks and does spread around the country , some enterprising lawyers would then seek to go after any company that uses "early termination fees" in their contracts, ( i.e. satellite tv, internet providers, leases, etc.) As if the courts aren't already clogged with enough cases now.

[drunken monkey]

i think there's a bit of mis-reporting there.

If you read it, the thing that the Judge deemed illegal is the way that the "fee" was worked out; more to the point that it wasn't.
As far as I'm aware, the fee is usually in place to offset the subsidising of the handset costs by the provider and hence tied to the length of the contract. What it seems like the Judge is pointing out, is that it is not fair for the fee to be the same for someone who breaks contract early and one who breaks contract late (ignoring the thing about contracts not needing to be fair to be legal).

Its seems that the most likely eventuality is that there would be one country wide regulator for mobile telecoms contracts and the related fees and the aforementioned higher initial handset cost.
What it also means is that things are likely to more expensive immediately to offset the loss in early termination fees.

[ericn1300]

Originally Posted by drunken monkey

Its seems that the most likely eventuality is that there would be one country wide regulator for mobile telecoms contracts and the related fees and the aforementioned higher initial handset cost.

Wow, Isn't that the same thing the credit card companies did? Get the regulations taken out of the hands of the states and turn it over to the bought and paid for federal government. That really didn't work out well for consumers. I hope the demos have enough power after the next election (less than 100 days now) to resist the telecom lobbiests.

[drunken monkey]

I think that part of the real problem isn't that the fees may be illegal/unfair, more that people who signed a contract knowing that there is an early termination fee are trying to get out paying that fee.

That is why I question the validity of the judgement in the first place.
If it's in the contract that the customer signed and henced agreed to, why is it illegal?

[Damien]

I got my planned cancelled with no fees. Quite easy. Complain and prove that your area receives bad signal and you're set.

[drunken monkey]

Originally Posted by Damien

I got my planned cancelled with no fees. Quite easy. Complain and prove that your area receives bad signal and you're set.

Well, in your case, you were not given the service you were expecting
i.e they didn't fulfill their side of the contract.

In those cases, no fee is applicable because one side (them) is in breach of contract. That isn't going to be the case for a lot of others who wants out of a contract. Again, this may be because of my natural cynical self but I can see that lots of people just want out, especially in a time where money is getting tight, whether or not they are getting their service.

I can't even begin to think what this will do for the already troubled mortgage sector.

['97ventureowner]

Originally Posted by drunken monkey

I think that part of the real problem isn't that the fees may be illegal/unfair, more that people who signed a contract knowing that there is an early termination fee are trying to get out paying that fee.

But give any knowledgeable lawyer the time and resources and they can sue to get that contract voided on some grounds or loophole whether it be through a class action lawsuit or a general lawsuit. I've seen it happen before in the '90s with credit card user agreements and other similar type contracts. There have been other challenges made by lawyers for other types of contracts , if someone feels "wronged" then that's all it takes to get the ball rolling.

[drunken monkey]

My immediate gut reaction is that it is a foolish thing to persue because in the long term, those costs would just be incoporated into the services which makes things expensive in the long term.

Thing with contract law is that it really is quite simple to the point that there shouldn't be much room for argument. If anything, this is more indicative of the Judge than anything. As I said before though, it seems like the issue the Judge has is with the way the fee is calculated and not with the fee itself.

It will be interesting to see how this plays out.
In the UK, we've recently had bank charges under scrutiny with the result that many people who have previously incurred charges on their account, receiving a refund.

['97ventureowner]

Originally Posted by drunken monkey

In the UK, we've recently had bank charges under scrutiny with the result that many people who have previously incurred charges on their account, receiving a refund.

We had something similar to that here across the pond in the past 10-15 years with credit card fees and how other fees associated with the cards are calculated. There were some class action suits brought against the card issuers and I happened to be party to a couple. Funny thing is I think the most i received from the settlement was about $7.00 in one case and a $10 voucher in another. We just went through another class action suit brought against credit cards for the way they calculated some fees or something for transactions made in foreign countries. I haven't used my cards out of the US so I don't know what the plaintiffs are going to get out of this one,( it is estimated it could go as high as $40 depending on your amount of transactions made during the affected time frame in the suit.)

[ericn1300]

Originally Posted by drunken monkey

Thing with contract law is that it really is quite simple to the point that there shouldn't be much room for argument.

It's really not that simple. Contract law requires that all contracts conform to civil and criminal law and other norms. Any contract can be contested in court and if the complaint is frivolous then the plaintiff can be ordered to pay court costs. In this case the complaint was upheld and early termination fees were found to be illegal.

Just because it's in writing doesn't mean it's right. Like those “contracts” on the back of your parking lot stub that relieves the owners of all liability? Wrong. They will held liable if found negligent regardless of what it says.

[drunken monkey]

I was talking about how a contract works;
i.e where two parties sign a document promising a for b.

It follows that in reasonable cases, it is easy to determine if there is a breach of that contract. But this is irrelevent because as far as I can tell, the thing the Judge has issue with, is how the fee is calculated, or more to the point that it is not.
It sounds to me that what the Judge wants, is a more reasonable fee calculation.

Originally Posted by article

But in overruling that decision, Sabraw said the jurors appear to have erred in assuming the fees were valid, and she took issue with the way Sprint Nextel determined that its customers owed the fees.

"Sprint did no damage analysis that considered the lost revenue from contracts, the avoidable costs and Sprint's expected lost profits from contract terminations," she said.

Nonetheless, Sabraw preserved a portion of the jury's verdict and used that to scale back the amount of refunds the suit initially had sought.

[quote=ericn1300]
Just because it's in writing doesn't mean it's right. Like those “contracts” on the back of your parking lot stub that relieves the owners of all liability? Wrong. They will held liable if found negligent regardless of what it says.[quote]

That's something else entirely and nothing to do with contract.
That little note is reminding you that the contract between you and the car parking lot is not to do with the security of your car and is 100% true.

However, while the car is parked in their lot, they are the ones responsible for the security of their lot and hence your car in their lot; that is why they are liable under tort.

[ericn1300]

Originally Posted by drunken monkey

as far as I can tell, the thing the Judge has issue with, is how the fee is calculated, or more to the point that it is not.
It sounds to me that what the Judge wants, is a more reasonable fee calculation.

Exactly. The Judge found that the fee charged was in violation of usury laws in California and therefore unenforceable.