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 a fixed-length home phone service contract in which you received a discount on a product essential to the use of the service, such as a phone or a VoIP modem, 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 a product, 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 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 a phone or a VoIP modem.
[Discount on the sale price of the device] - [Discount on the sale price of the device 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 12 months and received a phone worth $200 for free, the value of the discount given is $200. If you decide to cancel the contract in the 7th month, the maximum cancellation fee the service provider can charge will be calculated as follows:
$200 - ($200 x 7 ÷ 12), simplified as $200 - $116.66 = $83.33.
The service provider can charge a maximum fee of $83.33.
If you concluded a fixed-length home phone service contract in which you received no discount on a device essential to the use of the service, such as a phone, the service provider is subject to rules that limit the cancellation fees that may be charged.
Calculating cancellation fees
If you did not receive a discount on the sale price of a device essential to the use of the service, such as a phone, the cancellation fees cannot exceed the lesser of the following 2 amounts:
- an amount not exceeding 10% of the price of the services specified in the contract that were not delivered.
This calculation also applies if you received a discount on the price of a service.
Sample calculation when no discount was given
If you signed a 12-month contract with a monthly fee of $30 and decide to cancel your contract in the 7th month, the price of the services specified in the contract that were not delivered is $150 (5 months [number of months remaining in the contract] x $30 [monthly fee]).
10% of $150 is $15. As this amount is lesser than $50, the maximum cancellation fee that can be charged is $15.
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. See Contact us to find out how to reach us.
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.