{"id":4597,"date":"2022-06-30T09:06:04","date_gmt":"2022-06-30T08:06:04","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=4597"},"modified":"2025-01-27T10:16:18","modified_gmt":"2025-01-27T10:16:18","slug":"charging-a-cancellation-fee","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/charging-a-cancellation-fee\/","title":{"rendered":"When Can My UK Business Charge a Cancellation Fee?"},"content":{"rendered":"\n

Cancellations can be highly frustrating when running a business. Unfortunately, with the Covid-19 pandemic, many companies have received a rise in client cancellations. Although, cancellation fee clauses<\/a> enable some organisations to protect themselves against financial loss. However, these clauses can be unpopular amongst clients. Therefore, exploring the best ways to use them might be a good idea. This article will outline what your business can include within a cancellation clause and when you should include a cancellation fee within your contracts. <\/p>\n\n\n\n

What is a Cancellation Charge?<\/h2>\n\n\n\n

Under the terms of a contract, your business can choose to request payment in the event of cancellation. Businesses often refer to this as a ‘cancellation charge’ or ‘cancellation fee’. Typically, businesses will require a client to make a cancellation payment due to the early termination of the contract. <\/p>\n\n\n\n

For example, say your IT company<\/a> agrees to a 12-month contract with another business requiring them to make 12 monthly payments in exchange for software support. In this case, you might draft a cancellation fee clause to charge the other business a fee to end the contract early.<\/p>\n\n\n\n

Three Steps for Safe Use of Cancellation Fees<\/h2>\n\n\n\n

Firstly, you should outline any cancellation fees within the contract. If you fail to do this, you will unlikely have the legal right to charge a cancellation payment.<\/p>\n\n\n\n

Secondly, you should ensure that the wording cancellation clause should be fair and transparent. It is unlikely the courts will enforce unclear or unfair cancellation clauses. Therefore, it is a good idea to have a lawyer draft them to avoid this. <\/p>\n\n\n\n

Finally, you should ensure you ask for the correct cancellation fee<\/a>. For example, say your business runs a gym and provides users with 12-month contracts that request payment of the remaining 12 months upon early termination. In this case, you can not ask for more.<\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

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