Is a phone agreement a legally binding business energy contract?

What Ofgem says

Ofgem's guidance for microbusinesses is blunt: once you agree a business energy contract you can't simply cancel within a set window, and that applies even if you agreed by phone. Your verbal agreement is binding. That is why a sales call needs more care than it feels like it does.

How it goes wrong

A typical story: a salon owner takes a call from someone who says they are "reviewing your account". The caller reads out a price, the owner says "go on then" to end the call, and weeks later a new supplier's welcome letter arrives. The "yes" is on a recording, and the contract is live.

Calls like this are common; see why in cold calls about business energy.

Protect yourself on a call

• Don't agree on the first call. Say you'll consider a written offer.
• Ask who is calling and whether they are the supplier or a broker. Your contract is always with a supplier, not the broker.
• Ask for the Principal Terms in writing: price, length, exit fees and any broker costs.
• Be careful with a Letter of Authority. Read is it safe to sign a letter of authority.
• Keep notes: date, name, what was said.

If you already agreed on the phone

1. Ask for the written terms, and for the call recording if one exists.
2. Check what was agreed against what you were told. If they differ, complain to the seller in writing. Brokers working with suppliers should belong to a dispute scheme; see what is a QDSS.
3. If you are still unhappy, microbusinesses and small businesses can take a complaint to the Energy Ombudsman once the supplier has had 8 weeks, or sooner with a deadlock letter.
4. Read whether you can cancel a new contract.

Don't ignore a welcome letter hoping it goes away. The contract may be live, and your old supplier may seek an exit fee.

Questions to ask a caller

• Which company will supply my energy, and what is its name on the contract?
• What is the unit rate, standing charge and contract length, and is any charge passed through?
• Is there a broker cost, and how much is it in pounds over the whole term?
• What is the exit fee?

Ofgem says broker costs paid through the supplier must be shown in the Principal Terms, so the caller should be able to point to them. Sales staff of suppliers do not have to disclose their own commission. Write down the answers during the call.

Next steps

Next time, ask for the terms by email. If a seller won't send them, that tells you something. For a checklist see the contract terms to check.