Cancellation of an Online Service Contract

Where consumers buy goods over the internet they have a right to cancel the contract and, if received, return the goods. Likewise, a service contract can also be cancelled. But there are some specifics for service contracts.

Definition of a service contract

A service contract is defined in the Consumer Contracts Regulations 2013 as "a contract, other than a sales contract, under which a trader supplies or agrees to supply a service to a consumer and the consumer pays or agrees to pay the price."

Cooling off period

Usually a service contract, like a rental service, a gym membership or a cleaning service that is concluded online, can be cancelled up to 14 days after the day on which the contract was entered into.

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Now, the point of time at which the contract is concluded can be determined by the retailer. It is one of the core contract clauses and therefore retailers should make sure that they clearly inform about when and how the contract is formed in their terms and conditions. Additionally, attention should be paid to bringing the GTC to the customer's attention to avoid any ambiguity later on.

Commencement of the service

Basically, the retailer must not start the service before the end of the 14 days cooling off period. Practically, most of the times, this will not be in favour of the consumer as it makes him wait for two weeks instead of immediately benefitting from the service. 

Therefore, the law provides for the opportunity to start the service earlier. This can be done only with the consumer's express request. For this, retailers should make sure to include a checkbox in the ordering process or thereafter to obtain the express consent.

Compensation

Even if the consumer requested the start of the service he can still cancel the contract, as the right to cancel ceases after full performance of the service only.

To safeguard the retailer against the loss of work that they might have provided until cancellation, the Consumer Contracts Regulations provide the retailer with a right for compensation if the consumer cancels their contract even though they were informed that their cancellation right would cease if they requested the start of the supply of the service before the end of the cooling off period.

The amount the consumer has to pay is to be calculated in proportion to what has been supplied in comparison to the full coverage of the contract.

Exemptions

Regulation 28 of the Consumer Contracts Regulations 2013 lists the cases for which consumer cannot cancel a service contract, i.e.:

• Contracts for services for which the price is dependent on fluctuations on the financial market that cannot be controlled by the retailer. The supply of water, gas, electricity and district heating are not excluded.

• Contracts for a visit from the retailer that have been specifically requested by the consumer to do some urgent repair or maintenance work.

• Contracts for accommodation, transport of goods, vehicle rental services, catering or services related to leisure activities where such services are bought for a specific date.