Penalties for early termination of contracts: clearer warnings needed

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Penalties for early termination of contracts: clearer warnings needed

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Organisations such as insurers and utility providers often apply heavy charges for terminating a contract before its specified expiry date. The details of these are usually hidden within the Terms & Conditions. This is not good enough; people in general cannot be expected to foresee that, having hired a company to provide a service, they will then have to pay it to stop providing it.

Your petitioners argue, therefore, that terms of this kind should be specified in bold type immediately above the customer's-signature line or box in the contract document, using some such wording as 'If you wish to terminate this contract before [date], you will have to pay a penalty of between [minimum] and [maximum]'. From a specified date, absence of such a note should invalidate the penalty provision.

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