Understand Contract Language to Avoid Penalties

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The following Best Savings Tip comes from reader, Alison:

As much as I save with coupons, price comparison, cutting back, etc., I realize I missed something huge. Twice now I have been taken by a small print in a contract. If I had been more diligent, I would have saved over $700 easily.

When signing a purchase agreement for things like internet service, cable service, cell phone or a security system, make sure you know exactly when and how you can end that agreement. It could save you hundreds!

Also be very careful if you see a move in your future. Some companies will not move your service, so if you move you may be made to pay through the end of your contract anyway. Also, even if your contract ended, it may be auto-renewed and you still may not be able to get out of it at the time of your move.

We did not want to cancel our internet service. When we switched our phone company our internet ended our service since it was somehow connected to our phone line (which was with a separate company). They refused to connect it to our new line and they still made us pay for $150 of no service!

We paid through what the full term on our security service, which was (we thought) a full 3-year contract. We called to cancel at 2 and a half years and were told on the phone to call again after 3 years. When we did so we were told it AUTO-RENEWED for a full year more since we did not give written notice 30 days PRIOR to the 3 year date. It would keep auto renewing each year until written notice was given at least 30 days prior to the anniversary date of the contract so we gave it 11 months early for the next year.

That mistake cost us around $560 of unwanted service. My advice on a contract like this would be to give your notice of cancellation and the date you wish it cancelled ASAP. Even if it is 3 years ahead of time. Keep a record of all documentation so you have backup to refer to.

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What great advice! How many times do you sign up and then never look at, or think about, a contract until you need to modify the service or agreement it in some way?

Perhaps setting up a spreadsheet of some sort with all contracts and notes on the terms would be helpful to avoid this issue. Then, you would just have one document to refer to rather than several at once when in a time crunch.

How do you remember all the details of your purchase agreements?

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by Savings Lifestyle: Andrea on July 26, 2011

2 Comments

  • CCR ORCA Registration - July 26, 2011 @ 9:58 am
    1

    I agree, it’s so important to thoroughly read any contract before you sign it. I work with individuals who are looking for government contracts and the same rule applies. The federal contracts we deal with can be 60 pages long (yikes!) but it’s just as important to read every word of them as it is to read a simple, one-page service agreement with a private company. Caveat emptor!

  • Eillim Cintron - July 27, 2011 @ 10:16 am
    2

    This is great advice.
    I know exactly what you mean as I have been a victim of this as well.
    Two years ago we had made reservations and paid a deposit to hold our wedding at our favorite winery (not anymore of course!).
    After a few months we realized that they were not getting ready on their end for our wedding and when I inquire, it turns out that their wedding and event planner person have left and they did not had a replacement. Nobody knew a thing about how my wedding was going to be, not even the owner. Every time I will call they wouldn’t even remember what I was talking about.
    Our calls will sometimes take up to two weeks to be returned.
    Finally I sent a letter to the owner (in advice from our lawyer) letting him know that they were in breach of contract and that I no longer felt that was the right place to hold my wedding because they didn’t had a proper procedure for holding events at the time.
    The owner reply to me that the contract was for “renting” the place and that they wouldn’t return my money. I then try to get to a happy medium asking them to at least provide me with a few cases of wine in lieu of the deposit that I had paid. They reply no!
    We lost $650.00!

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