Changed Your Mind? How to Cancel a Service

Signing a contract of almost any sort can feel like a daunting prospect. Not from weddings to buying a new car, they can represent some of the biggest commitments that we ever make, and, and it should go without saying that we should always read the terms and conditions, that we should understand what we’re agreeing to. 

But it is important to also understand that contracts come with obligations for both the supplier and the consumer, that you have rights and protections too and that among the most important of these are cooling-off periods and cancellation policies.

Understanding Cooling-Off Periods

So, how does this work in practice? Well, firstly let’s differentiate between these two terms. A cooling-off period is a legally mandated protection which gives you the ability to change your mind after having signed that dotted line, whereas ‘early termination’ or cancellation refers to ending a fixed-term contract before its formal end date. 

The standard period of time for a cooling-off period is 14 days, and they’re governed by the Consumer Contract Regulations 2013, which cover rules on pre-contractual information, cancellation and additional charges for consumer contracts whether they are on-premises, off-premises or distance contracts (subject to limited exceptions). 

It’s important to remember that consumer and business contracts can be pretty different from each other. Businesses are afforded fewer protections than consumers, and cooling-off periods are often absent. It is, therefore, especially important for businesses to check what they’re signing before they agree to anything. 

How to Cancel Business Energy Contracts

One of the bigger financial commitments that any business has to undertake can be its energy contracts. Gas and electricity prices are continuing to rise, and businesses need energy in order to be able to function, making this a cost that it is necessary to keep under control. 

Business energy contracts are usually agreed over a fixed period of 12 months and three years. This means you should only sign a contract after you have finished your research and decided on the best deal for you. This is essential because you will be locked into this agreement until the contract expires once you’ve signed up.

It’s important to carry out regular contract reviews. Here’s a quick step-by-step guide on how to carry one out: 

1. Obtain a copy of your contract. You should have been given one when you signed up in the first place, but if you haven’t your supplier should be able to provide you with one, providing they can locate you. Your account reference number will be on your last bill. 

2. Locate the right parts of the contract. Look in particular for sections such as “Cooling-Off Period”, “Termination”, “Early Exit Fees”, “Renewal Terms” or “Cancellation Policy.”

3. Understand any penalties or charges. Pay particular attention to any clauses related to price changes, contract duration and automatic renewals. 

4. Seek clarification if necessary. If there is anything that you’re unclear about, having completed your review, your energy company should be able to advise further. 

There are common clauses related to early termination. Many energy contracts include fees for terminating before the agreed end date; they are usually calculated based on the remaining contract duration. Some contracts require a specific notice period before termination (30 days is standard), and a failure to provide such notice can even result in additional charges. 

But if this is all sounding a bit negative, there may be other clauses which are in place to protect you. Certain contracts, for example, allow termination without penalties in specific situations, such as moving to a new address where a provider doesn't operate. If a provider increases prices or changes terms significantly, you may have the right to terminate without penalties, provided you act within a specified timeframe.

Navigating Early Termination of Business Energy Contracts

The most common circumstances under which a business will be able to exit an energy contract early are: 

• Change of business location: If a business relocates to an area where the current energy provider cannot supply services, early termination may be permitted without penalties.

• Contract breach by the provider: If the energy provider fails to meet contractual obligations, such as providing a consistent supply, businesses may have grounds to terminate the contract early.

• Price increases: Some contracts allow termination if the provider increases prices or alters terms significantly, provided the business acts within a specified timeframe.

• Force majeure: Unforeseen events such as natural disasters or economic crises may render your contract void, depending on the terms.

Microbusinesses (that’s to say, those with fewer than 10 employees and a turnover below £2 million) have additional protections under Ofgem regulations, including clearer termination processes.

Fees are often part and parcel of the early termination process, and ultimately only you can make the decision over whether those costs are worthwhile, but there are things that you may be able to do in order to reduce or minimise them. 

To do so begins when you sign the contract in the first place. When entering a contract, negotiate clauses that allow for early termination under specific conditions, such as relocation or price changes. Some contracts may have a notice period near the end of the term during which you can switch providers without fees. 

Stay alert to price increases or changes in terms, and act promptly if your contract allows termination under these circumstances. You can even get the terms independently reviewed. And communicate with your provider. They may be able to waive fees for long-term customers or under exceptional circumstances.

Legal Rights and Consumer Protection

In the UK, consumers have greater protections under contract law than businesses. Specific rights to cancel contracts exist under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. These rights apply to agreements made by distance (e.g., online) or off-premises (e.g., at home). 

Under these regulations, consumers typically have a 14-day cooling-off period to cancel without penalty, though there may still be costs to pay. For faulty goods or services, the Consumer Rights Act 2015 lays out the rules for refunds, repairs, or replacements, setting out what is required from both sides of the contract.

There are various consumer protection organisations and resources for advice, according to the type of contract to which you’re specifically referring. Citizens Advice can offer guidance on consumer rights and contract disputes. At the same time, if you believe that a business has broken the law or acted unfairly, you can report it to your local Trading Standards office. This is also a service that Citizens Advice can perform. 

How to Approach Service Providers About Cancellation

For consumers who are looking to cancel services with providers, there are certainly ways and means of making the journey easier. Firstly, you need to prepare. Familiarise yourself with the contract concerned and understand any penalty charges. You’ll also need to gather evidence, in the event that you’re unhappy with that service, and make sure you know specifically which department within the provider you need to speak to. 

Once you’re speaking to them, clearly and firmly state your intentions. If you’re open to a different deal, listen to them. If you’re not, state clearly that you do not wish to be sold any alternatives. And when you’re completing the call, you’ll need to know if there are any further steps that you need to take. Request everything in writing, so that you’ve got documentary confirmation of what’s been agreed. 

The key to understanding the complexities of cancelling a service is understanding your contract. Provided you can do this, you’ll have the knowledge of what you are able to do and what you’re not able to do. 

Remember that businesses have fewer protections than private consumers, but what matters is what those original contractual clauses were! There are ways of contesting clauses that you believe to be unfair. Still, these can get complex and–especially if legal advice or assistance is required–expensive, and many providers will have contingencies in place for consumers and businesses in genuine difficulty. 

But ultimately, forewarned is forearmed, so regular contract reviews make sense for all. They can help with financial planning, as well as knowing and understanding what you’re paying for in the first place! By getting yours done, you’ll be better prepared for the present and the future.