Contract Cancellation 101

As an Entrepreneur or CEO you have probably discovered that trying to cancel a service contract, regardless of reason is a special form of hell.

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No matter how righteous your cause or even if you you are just out of funds, you will find that service providers have a special weapon in their contracts – camouflaged in the fine print at the end of their “Terms of Service” clause. Euphemistically called non-renewal this tiny paragraph hides a mountain of financial liability just waiting to jump onto your credit card.

Below is one example of the easier ones I have run across, but if you miss the 45-day deadline, your credit card is automatically hit with a 12 month renewal fee and there is nothing you can do about it!

Example:

Unless otherwise specified in your Order, to prevent renewal of a Full-Service Subscription, you or we must give written notice of non-renewal and this written notice must be received no less than forty-five (45) days in advance of the end of the Subscription Term. If you decide not to renew, you may send the notice of non-renewal by email to accountmanagement@xxxx.com

Technically called an Evergreen Contract , you will find it used by your Uniform Company, Automated Marketing Platforms, Fulfillment Centers and in such mundane areas as your dumpster rental and office cleaning contract and your lease.

What can you do to protect your company?

First and foremost: Always read your terms of service clause and mark your calendar with the critical non-renewal dates.

Second: No matter how happy you are with the service, always cancel 10 days before the end of your notice period.

Third:  Cancel in writing  via “Registered US Mail – Return Receipt Requested” and keep all the paperwork!

In conclusion, you should cancel every contract after the initial term, no matter how satisfied you are with the supplier. Cancelling gives you leverage for the next term!

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