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Cancellation Fees and Contracts

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Today many service based businesses use contracts with their clients or customers.  One industry that uses contracts readily are mobile phone carriers.  You sign a contract for 12 months or 24 months, and you pay a monthly fee for a set and allocated amount of minutes to phone, texts to send, and data you can use.

Mobile phone carriers a long time ago realised, not everyone wants a contract phone, so PAYG or pay as you go was born.  This is good for those who do not like to be locked into a contract.

However, not all businesses or industries followed the mobile carriers lead.

Businessman hands in chains

Gym memberships are another industry that likes their members to sign a contract.  There are some gyms that will allow members to sort of pay as you go, or pay as you workout.  These tend to be more expensive.

So if you are in a contract, how can you get out of the contract without paying a cancellation fee?

You may not be able to is the bottom line.

In some countries and states, there are “cooling off” periods once you sign a contract.  This means that during that “cooling off” period, you can cancel the contract for any reason without any fees or charges.

Once this cooling off period has passed, cancelling a contract can be difficult as it is a legally binding agreement.  You can speak to the company that you have the contract with to inquire as to what their policies are regarding cancellations.  You may get a sympathetic ear, or have a valid reason to cancel and the company allows you out of the contract.  In some instances if you are moving out of the country or away for work, you can be allowed out of the contract with no fee.

Lastly, if there is a cancellation fee, you can try to negotiate it down to what you can afford.  If it is a case of you are insolvent and can no longer afford the monthly bill, the account can be included in a form of debt management or even bankruptcy.

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