Cancellation-by-you clause

What is a cancellation-by-you clause?

A cancellation-by-you clause is a provision in a contract that allows you to cancel a contract under specific criteria. A well-written contract will outline clearly what those criteria are so that there is no confusion on either side of the agreement for how the cancellation-by-you may be enacted. Importantly, the cancellation-by-you clause should also outline clearly how a contract can be canceled too. That means there is less room for confusion, but also that the cancellation process is more straightforward from the outset - given that both sides know what the procedure is from the start. 

How does a cancellation-by-you clause work?

A cancellation-by-you clause works by two parties signing a contract that allows one or both of them to cancel the contract at any time. The reason that both parties can cancel the contract will vary depending on the purpose of the contract. As a result, why one side can make use of the cancellation-by-you clause may be different from the other. 

Additionally, how cancellation-by-you clauses are worded in contracts in different industries will vary according to what provokes the want to cancel a contract in the first place. Insurers and their policies are great examples of cancellation-by-you clauses; the insurer may cancel your policy if you have not paid your premium. Or, a policyholder may cancel their policy within the first two weeks as, upon reading the policy in full, they have found it to be lacking. 

Advantages of a cancellation-by-you clause 

An outstanding advantage that may be initially overlooked regarding a cancellation clause is that it can help persuade both sides to sign the contract in the first instance. Without the ability to cancel a service or product under a policy or agreement that has been signed, many entities will not want to enter the agreement for fear of being tied into a situation that is no longer beneficial to them. 

While that does not necessarily mean that every contract should include a cancellation clause, it is still a good idea in many instances - insurance policies being a good one, as previously mentioned above. Many insurers have a cancellation clause that they can use when customers have breached a condition in their contract, but also customers have the ability to cancel their contract too under certain circumstances. Without that clause, people’s desire to sign up for such policies in the first place is arguably reduced. 

Contractbook and cancellation-by-you clause

Contractbook can help with cancellation-by-you clauses thanks to our document generation software helping to encourage a highly collaborative process. As a result, should two parties be looking to create a contract that they believe requires a cancellation-by-you clause, both sides can include it and negotiate the terms included in that cancellation-by-you clause too. It makes the negotiation stage much much quicker, making for more efficient business processes. Contracts can be created and signed at pace - in comparison to how contracts can sometimes be finalized. Plus, our contracts from our template library can be a great starting point for anybody - and they are legally reliable too.