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Question on Contract Termination

Discussion in 'Business Fundamentals' started by BRENTMAN, Oct 10, 2009.

  1. BRENTMAN

    BRENTMAN Senior Member
    Messages: 222

    Lets say you have a $500 seasonal account that has paid the full price at the signing of the contract, but 3/4 of the way through the season you wish to terminate the contract.....how would you go about reimbursing them for the rest of the year that they paid for?
     
    Last edited: Oct 10, 2009
  2. WIPensFan

    WIPensFan PlowSite Veteran
    Messages: 3,508

    This is just a guess but you might have to give the whole $500.00 back. Does your contract give you an out or is it simply $500.00 for the season and that's it. What I'm getting at is if the contract said $100.00/month then you could easily determain what is left. Since it says $500.00 for the season, you have to provide service all season or give back the money. Like I said it's a guess, I wonder what would happen in court?
     
  3. BRENTMAN

    BRENTMAN Senior Member
    Messages: 222

    So what would you recommend putting in my contract about this....I'm basically using a formula for my seasonals... Per Push rate x Avg. plowable events.

    I've got a couple ideas floating around in my head about it, but not sure exactly.

    Thinking some how state that it is Seasonal Price divided by 6 months? orrrrr maybe not

    or that theres a cancellation fee?

    any ideas?
     
  4. big acres

    big acres Senior Member
    Messages: 653

    politely suggest that the relationship is not a good fit for whatever the reason. Maybe you ould refer them to someone else and suggest a pro-rata refund... ask the client what they think is fair. They just might be reasonable people.
     
  5. BRENTMAN

    BRENTMAN Senior Member
    Messages: 222

    Seasonal Contract Termination:
    Canceled during Nov and Dec its 50% refund
    Canceled during Jan and Feb its 30% refund
    Canceled during Mar and Apr its 5% refund

    Maybe something like that would work?
     
  6. BRENTMAN

    BRENTMAN Senior Member
    Messages: 222

    I'm just touching up my contract and thinking ahead just incase I were to be in this situation....It basically states so far that they can cancel with an advanced written notice but anything paid to me previously I keep, but I also state that I can cancel at any time as well, and I dont want people to fear giving me $500 and then me cancelling a month later, and not stating anything about refunding $500 that they paid for one lousy month of plowing....
     
  7. WIPensFan

    WIPensFan PlowSite Veteran
    Messages: 3,508

    Something along those lines would be good IMO. Might want to talk to a lawyer to firm it up. It will cost you a little but maybe save you a lot.
     
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    If they quite ,nothing! You could give them back 1/3 if you canceled them.
     
  9. TCLA

    TCLA 2000 Club Member
    Messages: 2,699

    If I were you I would word your residential contracts from your perspective. Along the lines of grandviews comment would be right......if you are doing what is expected of you and the customer cancels they do not get a refund. If you cancel for any reason a prorated refund would be in order.
     
  10. BRENTMAN

    BRENTMAN Senior Member
    Messages: 222

    yes I agree that if THEY cancel, there is no refund.

    I'm leaning toward that formula I posted....how do you guys think about that?
    Again, if it really came down to it, I'd stick it out as much as I could before I cracked, so I dont think the chances of me facing this situation and losing much (if any) money is likely...
     
  11. Grn Mtn

    Grn Mtn PlowSite.com Addict
    Messages: 1,644

    good advice, roll with it.
     
  12. palmtree907

    palmtree907 Member
    Messages: 69

    I have yet to find a residential that will do anyhting other than per push. I put that either party may cancel at anytime without penalty. If / when I get one, i will probably do something that has a per month price and keep in mind, to be a legal contract, there must be a start date and a stop date. If a contract gets cancelled, it would then be easiest to do a proration.