If I am in a service contract and terminate the contract early, do I have to pay the termination penalty fee immediately?

Asked on August 21, 2014 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If the contract specified a time frame for paying the termination fee, you must pay it within that time period.  If no period is specified, there is no hard-and-fast rule: typically, you'd be expected to pay it within the normal industry guidelines for that industry--or, if applicable, the guideliness for how you paid other bills under this contract--for payments of any amounts due and owing. For example, if amounts due under the service contract were generally to be paid within, say, 30 days of invoicing, you'd most likely have to pay the termination fee within 30 days of termination.


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