A cancellation clause sets out how a buyer or seller ends a service contract, when the ending takes effect, and what, if anything, comes back. It is often the least read part of a contract and one of the most important when plans change, such as a sale of the car, a move, or a decision to stop. This article describes how such clauses usually work in general. It does not describe what any named company's contract covers, costs, or requires.
Who may end the contract
Check whether only the buyer may cancel, or whether the seller may also cancel, and under what stated grounds. A clause that lets the seller cancel for a stated reason is different from one that lets the seller cancel at will. Note any conditions attached to either side's right to end the agreement.
How notice works
Most clauses require written notice sent to a stated address or through a stated route. Check what counts as written notice, whether email is accepted, whether a form is required, and whether the cancellation takes effect when notice is received or when it is processed. Keep proof of sending, and keep a copy of what was sent.
The start point
Clauses count from different starting points, such as the time of purchase, the time of activation, the end of a stated waiting period, or the time the contract is registered with a provider. Read the contract's own definition of its start, because the refund basis often depends on it.
How the refund is worked out
Common methods include a pro-rated return of the unused share of the price, a fixed charge taken before any return, and no return after a stated period. Check whether a cancellation charge is deducted, whether that charge is fixed or calculated, and whether any service already used reduces the return. Ask the seller to show the formula in writing and to walk through a worked example using the contract's own terms.
What happens when the car is sold
Many contracts can be transferred to a new owner, and some end when the vehicle leaves the original owner. Check the transfer rule and whether any cancellation return goes to the original buyer or to the new owner. The answer is not automatic, so read the clause and do not assume it.
Where the refund goes
Check whether a refund returns to the original payment method, to the seller, or as a credit toward another product. Each route has different steps, and the clause should say which one applies.
State rules and the published figures
Some places have rules that affect cancellation, and the contract may be read alongside them. Check the consumer office where you live for the rules that apply to you. This is general information, not legal advice.
This site's own tables publish the figures for factory terms and when those terms end, and this article does not restate them. The Acura service contract page and the Audi service contract page set out factory terms and when contracts end, so read the page for the brand you are reviewing alongside the contract itself.
Cancellation is a route most readers hope not to use. Read the clause while the contract is still open, write down the answers to each question above, and keep them with the paperwork.