When is a contract cancelled?

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When is a contract cancelled?

I’m currently in a contract with alarm company A that ends in roughly 7 months. I go into a contract with alarm company B and inquire with company A to cancel contract. Company A says I’ll have to submit a cancellation letter and pay the remainding balance of the contract. I decide not to send the letter to cancel company A contract. I make payments to both company A and B. My inquery about cancellation happened about 5 months ago. I recently received a letter from company A saying they cancelled my contract and that I need to pay the balance by the end of the month. Am I obligated to pay?

Asked on November 9, 2011 under Business Law, Hawaii

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

If you have a contract for services that has a few months left to run on it, that contract would ordinarily not be cancellable early unless 1) there was some term or condition in it allowing early cancellation; 2) the company violated the contract in some material (important) way; or 3) you asked to cancel and the company agreed to let you cancel--but since that agreement is voluntary, they could impose conditions on it, and if you accept  those conditions, you'd have to abide by it.

Under the situation you describe, you did not accept their early cancellation conditions, since you did not provide an early cancellation letter or pay the outstanding balance at the time. Therefore, it would seem that your contract was not cancelled. You would be obligated for the remaining term of the contract--including paying for any remaining months--but would not have to make a lump sum payment of the balance; they will also have to continue providing the service while you are paying, for the remainder of the term.


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