Cancellation Fee

Mmmm_Lemony

I am halfway through a 2 year contract with a service provider. I have 3 products with them. I pay €20 monthly for each product. I wish to cancel the contract.

Under the terms & conditions of the contract it states -
"If you have committed to remaining a customer of [service provider] for a Minimum Term and you cancel after the Cooling-Off Period but before the end of that Minimum Term you must provide us with 30 days’ notice and you will incur a Cancellation Charge. We will tell you what the Cancellation Charge will be when you contact us to cancel."

Having contacted an agent of the service provider I've been informed that the cancellation fee is €720. It's equivalent to the amount I would end up paying if I don't cancel the contract. Had I known that the cancellation fee was this steep I would never have entered into the contract. It could also be said, had my auntie a pair of marakas, she would be my uncle.

I believe I entered into the contract without knowing the potential outcome should I breach or want to break from contract. Do I have a case that this fee was masked from me and as such the contract is not legally binding? My reasoning is that the exit fee is too steep. I'm not looking to cheat the system, just looking for peoples thoughts on these types of contracts.

Caranica

You signed a contract that you would pay 24 X €60. You've paid 12 X €60 of course the rest is due as that's what you commited to paying in the first place. It's not an exit fee, it's fulfillment of contracted payments.

banie01

Mmmm_Lemony wrote: »

I believe I entered into the contract without knowing the potential outcome should I breach or want to break from contract. Do I have a case that this fee was masked from me and as such the contract is not legally binding? My reasoning is that the exit fee is too steep. I'm not looking to cheat the system, just looking for peoples thoughts on these types of contracts.

You signed the contract knowing there was a minimum operative period of 24months.
The mention of the service provider letting you know what the cancellation charge would be is a red herring.

It's not an exit fee, its the minimum amount you agreed to pay for the contracted service and term, service provider is allowed to recoup their projected income for the minimum period you agreed to.

Mmmm_Lemony

Caranica wrote: »

You signed a contract that you would pay 24 X €60. You've paid 12 X €60 of course the rest is due as that's what you commited to paying in the first place. It's not an exit fee, it's fulfillment of contracted payments.

You are right in that the T&Cs call it a 'cancellation fee', not an 'exit fee'. I shouldn't have called it that myself.

What I'm asking here is why, in the T&Cs of the contract, it couldn't clearly call out that the penalty for cancellation is the full amount of the contractually agreed figure, I.E. 24x60 (less payments made to date). Of course the figure will be different for every customer and at every stage of cancellation, but they have a formula. The fact it's calling it a 'cancellation fee' is misleading in my opinion. I expected a penalty for exiting the contract before its completion, but did not expect the full amount of the remainder of the contract.

I'm not going to cancel the contract as its pointless to do so. It will cost me 720 regardless of whether I complete the contract or not, but I'm annoyed it wasn't transparent what the 'cancellation fee' would amount to.

Mmmm_Lemony

banie01 wrote: »

The mention of the service provider letting you know what the cancellation charge would be is a red herring.

I'm not sure what you mean by this. Are you agreeing that the language used is misleading?

banie01 wrote: »

...service provider is allowed to recoup their projected income for the minimum period you agreed to.

I believe they have recouped their cost of acquisition in this case, but not their projected income. However, I'm not disagreeing with this point. I'm arguing that the outcome of a cancellation wasn't transparent. I had no intention of cancelling the contract when I entered into it.

GerardKeating

Mmmm_Lemony wrote: »

I believe they have recouped their cost of acquisition in this case, but not their projected income. However, I'm not disagreeing with this point. I'm arguing that the outcome of a cancellation wasn't transparent. I had no intention of cancelling the contract when I entered into it.

You haven't said what kind of "service contact" it is, many phone contacts have some break clauses, like after a price change. Does your contact have anything like this?

Mmmm_Lemony

Unfortunately no recent price changes.

Salary Negotiator

They don’t stipulate what the cancellation fee is because it’s based on the monthly subscription fee so if that increases so does the cancellation fee.

Carawaystick

Either you could argue that its an unfair consumer contract, as the service provider get their full income, despite not having the costs to fulfil their side, and you didn't get to negoitatre the terms of the constract.

Or you make it as expensive as possible for the service provider to fulfil their side of the contract.

Or both