5.1 This chapter looks at the contractual situation of care-home residents - for example, whether residents have written contracts and, if so, what those contracts say. Those who provided evidence to the inquiry team highlighted a number of problems faced by residents and by their relatives. Before the inquiry was put in hand, it had been suggested that - in some cases - residents did not have written contracts or that, where they did, those contracts lacked clarity and detail to explain what services and facilities could be expected from the home provider. It had also been suggested that contracts lacked information about individual residents’ rights and obligations and/or those of their relatives. Written and oral evidence from respondents confirmed these criticisms, while the survey of residents further showed that most of them had no knowledge of any written contract or what it might contain.

5.2 The OFT’s survey of residents showed that fewer than one in five was aware of being a signatory to a contract. More than one-third of those residents who were interviewed believed that there was a contract which they or a relative had signed. A lower proportion, 24% of those under the age of 75 had signed a contract (or believed that a friend or relative had) compared with 38% for other residents. One in four residents or their relatives had had a copy of their contract at any time. Two thirds of residents either did not know or could not remember what sort of areas were covered by their agreement with the home. The apparent absence of a written contract, or the lack of awareness of the contract terms in so many cases, is disturbing.

5.3 It may be that, in some instances, a relative of the resident, or some other person, does hold the contract for safe keeping. Nevertheless most of the residents interviewed claimed not to have signed a contract relating to their care. This may be partly explained by cases where a local authority has purchased care services from an independent provider on behalf of potential residents when the contracts would be between purchaser and provider. Support for this thesis is provided by the OFT survey of residents which showed that a higher proportion of those in the private and voluntary sectors had signed a contract (or a friend or relative had done so). Where a local authority purchases care services from an independent provider, the residents affected would not generally be a party to these arrangements unless they had been specially joined into a tripartite contract. The OFT has been told by the Audit Commission that the use of such tripartite contracts is increasing. In other cases, there may be two concurrent contracts, one between the resident and the care-home owner and the other between the care-home owner and the local authority.

5.5 Many of those who submitted evidence to the OFT inquiry regarded the care plan or pre-admission care assessment of the needs of individual residents as a key element of the contract which should be reflected in contractual documentation. The Framework Contract between Residential Care Provider and Resident (issued by the Continuing Care Conference) clearly makes reference to the assessment being prepared and agreed with the resident and the resident’s previously nominated carer, relative, or advocate.

b the pre-admission care assessment should set out in clear language the needs of the individual being assessed;

c brochures and other pre-admission information given by the home or by others should be directed towards clearly confirming the ability of the home to match the individual’s needs;

d an agreed care plan should form part of the contractual documentation so that everyone involved is clear about the terms of the service the individual should expect; and

5.7 The OFT’s survey of residents showed that, where respondents did know about a contract, it rarely - if ever - specified what they could expect from the home. Those providing evidence to the inquiry commented on the fact that, where contracts existed, they were not sufficiently clear, transparent, and comprehensive. Key terms and conditions were alleged to be missing or hidden within the small print. Others were seen as being ambiguous or unfair, or both. The OFT has also received some formal complaints about specific terms in contracts. In addition, during the course of the inquiry, it asked various bodies to supply copies of contracts currently in use.

5.8 The main problems in care-home contracts appear to arise from the lack of clarity about the financial obligations assumed when the contract is entered into, such as the costs of terminating the agreement following the death of a resident. There are also problems of lengthy and unnecessarily legalistic contracts and the use of small and dense print that is difficult for anybody to read. Many contracts also extend liability to a relative or a guarantor but may not do so clearly. Given that contracts may often be entered into at a time of particular distress or stress it is vital that the full implications are known to those with expectations and obligations arising from the contract.

5.9 The OFT has studied contracts not only in the light of general concerns but taking account of specific complaints that have been made under the Unfair Terms in Consumer Contracts Regulations (which gave consumers new rights regarding contracts with businesses entered into from 1 July 1995). Among other things, the Regulations say that a consumer is not bound by a standard term in a contract with a seller or supplier if that term is unfair. The Regulations also give the Director General of Fair Trading powers to stop the use of unfair standard terms by businesses and to prevent anyone recommending such terms - if necessary by obtaining a court injunction (interdict in Scotland).

5.10 The OFT has prepared guidance on the extent to which terms in existing contracts have the potential to be regarded as unfair in the context of the regulations. This guidance, set out in draft form in Appendix C, is to be finalised in the next few months following discussions with interested parties. Readers’ views on the guidance would be welcome.