Service agreements are legal contracts that ensure maintenance, repairs and uninterrupted product availability to customers. They usually specify the fees for guaranteed repair response times; routine equipment replacement or upgrades for the term of the agreement; and being able to speak directly to product experts in the vendor's company. Service agreements also include termination clauses that describe how to end the contractual relationship. These clauses vary greatly between vendors and product types, but the general processes are similar.
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Read the termination clause in your service agreement and make note of any time-related restrictions, such as required advance notice or penalties for early termination.
Determine whether terminating your agreement early will cost you more than if you wait for the normal contract end date and follow the standard termination process. Cancelling a contract before the end of the term may result in significant early cancellation fees.
Follow the process identified in the termination clause to end the contractual relationship. Most service agreements can only terminate if you submit written notice to the vendor within a named notification period (30 days, 60 days or some other period) of your intent to cancel the contract.
Return any equipment to the vendor that was provided to you as part of the service agreement and pay any cancellation or termination fees.
Tips and warnings
- Always look for automatic renewals in service agreements you sign, and ask at the time of signing what the process or penalty is for early termination.
- When you cancel a service agreement, remember that the vendor is a business partner and try to be pleasant in your dealings with him. If you have a disagreement, you can ask your attorney to handle the contract termination for you.
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