Are you interested in learning more about cancellation fees for a fixed-length contract? You may be interested in the following information.
If you concluded fixed length remote monitoring service contract after June 30, 2010, in which you received a discount on a product essential to the use of the service, such as an alarm system, the service provider is subject to rules that limit the cancellation fees that can be charged.
Factors that affect the cancellation fees
The greater the discount on the sales price of an alarm system, the higher the cancellation fees can be. The closer you are to the end of the contract at the time of termination, the lesser the cancellation fees can be. The cancellation fees can never be greater than the amount of the discount you received.
Discounts you received on the price of a service or rental have no impact on the calculation of the cancellation fees.
Calculating the cancellation fees
Here is the formula to allow you to calculate the maximum cancellation fees you can be charged if you received a discount on the sale price of an alarm system.
[Discount on the sale price of the alarm system] - [Discount on the sale price of the alarm system x Number of complete months elapsed ÷ Length of the contract] = Maximum cancellation fees
The month during which you terminate the contract is considered a completed month.
Sample calculation when a discount has been given
If you signed a contract for 36 months and received an alarm system worth $350 for free, the value of the discount given is $350. You decide to cancel the contract in the 22nd month, the maximum cancellation fee the service provider can charge will be calculated as follows :
$350 - ($350 x 22 ÷ 36), simplified as $350 - $213.89 = $136.11
The service provider can charge a maximum fee of $136.11.
If you concluded fixed length remote monitoring service contract after June 30, 2010, in which you received no discount on a product essential to the use of the service, such as an alarm system, the service provider is subject to rules that limit the cancellation fees that can be charged.
Calculating the cancellation fees
If you received no discount on the equipment, the maximum cancellation fees correspond to the lower of the following amounts :
- the amount corresponding to 10% of the price of the services provided by the contract that have not been rendered yet.
If you received a discount on the price of a service or on equipment rental, the same rules apply.
Sample calculation when no discount has been given
If you signed a contract for 36 months for $30 per month. You decide to cancel the contract in the 12th month. The price of the services provided by the contract that have not been rendered correspond to $720 (24 months [number of months provided by the contract] x $30 [monthly fee]).
10% of $720 equals $72. Because this amount is higher than $50, the maximum cancellation fee that can be charged to you is $50.
Failure to respect the maximum cancellation fees
If your service provider has charged cancellation fees greater than what is permitted, you can dispute the fees charged. You can also file a complaint with the Office de la protection du consommateur. The Contact us page provides the ways to reach us.
Contracts signed before June 30, 2010
If you signed your remote monitoring service contract before June 30, 2010, the service provider can charge you cancellation fees as stipulated in the contract. If you find these fees excessive, you can try to negotiate with the service provider.
The fees charged may be greater than the legal limit. Contact us to find out if recourse is available to you. You can also consult with a lawyer.
Last update : February 28, 2023
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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.