3 Facts to consider when cancelling your contract

If you’ve ever had a relationship end in a bit of a mess, you’ll know that some people are more difficult to break up with than others. The pain, the push back, the back and forth – it can be a difficult process.

The same can happen when you’re cancelling your contract with a service provider, be it a gym or a cell phone service. The process can be long and demoralising, but knowing the following three things can make it a little easier.

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Must know factors when cancelling a contract 

1. Requirement to notify you of the expiry date

Consumer contracts are regulated by Section 14 and Regulation 5 of the Consumer Protection Act 68 of 2008 (CPA). 

The CPA states that fixed-term agreements must not exceed the prescribed maximum period, which is 24 months from date of signature by the consumer.

“The maximum period can be more than 24 months if it is expressly agreed with the consumer, and the supplier can show demonstrable financial benefits to the consumer,” says Phenias Ncube, acting director in the Office of the Consumer Protector.

Before your contract expires, your supplier has an obligation to remind you of the impending expiry date, so that you cancel the agreement on time if you don’t want to continue it.

“The CPA provides that, if a fixed-term agreement is not more than 80 days, nor less than 40 business days before expiry, the supplier must notify the consumer about the impending expiry date. They must also stipulate any material changes if the contract is renewed, and any options that are available to the consumer, for example, changing a cell phone contract to a prepaid option,” says Ncube.

If you do not respond to the supplier, Ncube says, the contract will continue on a month-to-month basis. This can be helpful if you want to continue the contract, but don’t want to go to the trouble of renewing it. But if you’re no longer interested, it can be a huge inconvenience.

2. Requirement for you to give 20 business-days’ notice

When cancelling your contract, you need to give the supplier 20 business-days’ notice in writing or in any recordable manner. This will serve as proof should the provider deny the incident, or you run into trouble and you want to escalate the matter to your lawyers or a consumer protection organisation. In other words, the written notice allows the CPA to protect you.

“Business day, in terms of the act, means Monday to Friday excluding public holidays, weekends, and the day in which the notice is served to the business,” says Ncube.

You don’t need a reason to discontinue your relationship with your service provider. The provider can ask, but you don’t have to defend yourself or overly explain your reasons.

Ncube adds that the service provider can also cancel your contract by providing 20-business days’ notice for a material breach or failure on your part.

3. Regulation of cancellation fees

Should you decide to cancel your contract before the expiry date, the service provider or supplier will charge a cancellation fee. If you don’t pay it, your account will remain active and your credit report and score might be negatively affected.

Ncube says that cancellation charges are regulated by Regulation 5(2) of the CPA, and may not exceed a reasonable amount considering the following:

• The amount that you still owe the supplier up to the date of cancellation.
• The value of the transaction up to cancellation.
• The value of the goods that will remain in your possession after cancellation.
• The value of goods that are returned to the supplier.
• The duration of your agreement as initially agreed.
•  Any losses you have suffered or benefits you’ve accrued as a result of entering into the agreement.

“Regulation 5(3) prohibits suppliers from charging huge cancellation fees, which would have the effect of negating the consumer's right to cancel a fixed-term agreement as afforded to the consumer by the act,” says Ncube.

What if things go wrong?

Should your service provider fail to cancel your contract, even after you’ve met the conditions noted above, you are advised to escalate your case to the Consumer Protector.

“Consumers can lodge a formal complaint with consumer affairs offices that exist in every province,” says Ncube.

“At the national level they can call the National Consumer Commission (NCC) on 012 428 7000 or 086 758 4990, or email them complaints@thencc.org.za,” he adds.