If you concluded an open-ended cellular telephone contract on or after June 30, 2010, the service provider is subject to rules that limit the cancellation fees that can be charged. These rules provide that, with certain exceptions, the service provider cannot charge cancellation fees.
Exception: cancellation charges permitted
Merchants can charge cancellation fees when they allow you to:
- pay less than the total price of the cellular phone at the time the contract is concluded;
- and that the outstanding amount decreases progressively as each month of the contract elapses.
The later you cancel your contract, the lower the fees will be.
Calculating cancellation fees
Here is the formula to calculate the maximum cancellation fees that you can be charged if the exception applies.
[Amount of the unpaid portion of the sales price of the telephone when the contract was signed] - [1/48 x Amount of the unpaid portion of the sales price of the telephone when the contract was signed x Number of months elapsed on the contract] = maximum cancellation fee
Sample calculation of the maximum cancellation fees
When you concluded your contract, the merchant provided you a cellular phone worth $150. You did not pay this amount. Each month, the service provider reduces the sum of $150 by a certain amount. You decide to cancel your contract in the 22nd month.
To calculate the maximum fees that you can be charged, the service provider must apply the following formula.
$150 - [1/48 x $150 x 22], simplified as $150 - $68.75 = $81.25
The maximum cancellation fee is $81.25.
Contracts signed before June 30, 2010
If you signed your cellular phone 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 : May 3, 2021
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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.