What is a deemed contract?
A deemed contract is normally in place when any type of customer moves into new premises and starts to consume gas, electricity, or both, without agreeing a contract with a supplier. A deemed contract may also exist where an existing contract comes to an end but the customer continues to consume energy. This second possibility could arise in two ways:
- the original contract does not expressly say what will happen after termination. For example, if it does not say that the original contract terms must apply when you are ‘out of contract’
- the customer continues to consume gas and electricity, or both
2. Where a contract expires but the customer is still using gas, electricity, or both from the same supplier, a deemed contract is likely to exist if:
- the original contract does not expressly say what will happen after expiry, (eg it does not contain renewal provisions or state that the original terms still apply)
- the existing customer has told the supplier they don’t want the original contract to continue.
Around 10% of micro-businesses are on deemed contracts. It’s vital that they are aware that prices on these contracts are on average 80 per cent more than rates charged in a negotiated contract. If you are on a deemed contract you should shop around and compare supplier offers for a new energy contract, as you could make significant savings.