Cell Phone Contracts

Cell phones are a great communication tool and allow busy people to keep in touch with loved ones and coworkers. Cell phones can also pose a problem for many people because most plans force you to commit to a one- or two-year contract. Knowing the details of the contract you are entering into is an important part of choosing a cell phone service provider.

The contract for a cell phone is called an executory contract. This means that each party of the contract is agreeing to provide the other with an exchange. In the case of cell phones, the cell phone service provider is agreeing to provide monthly service to the customer in exchange for the customer's monthly payment. When you sign up for a cell phone plan, you will be informed of your monthly payment amount and when it is due. The first month of the plan will be prorated depending on when you sign your contract.

The ugly truth of cell phone contracts is that they are nearly impossible to break without incurring stiff penalties or cancellation fees. The standard cancellation fee averages out to be $175 and is charged to your account when you cancel your service any time before the contract is set to expire. This fee is charged no matter how far along your contract has progressed. If you cancel one month before the contract expires or eleven months before the contract expires, you are still charged the same steep cancellation fee.

The reason for your cancellation has no impact on whether or not this fee is charged to your account. Malfunctioning equipment, lack of a useable signal, and other problems with the cell phone service are still not considered acceptable reasons for cancellation. In fact, the only reason that has been considered acceptable is the death of the person who signed the contract. In this case, surviving family members must send a copy of the deceased person's death certificate to the cell phone service provider with a letter outlining the circumstances of the cancellation.

Before you sign on with a cell phone provider, carefully examine your contract and find out what the fee for cancellation would be if you stopped your service prior to the expiration date of your contract. Ask the sales representative if poor service or problems with your phone are considered acceptable reasons for cancellation. If not, you may want to think twice about getting locked in to such a contract.