An early termination fee (ETF) is a charge levied when a party wants to break the term of an agreement or long-term contract. They are stipulated in the contract or agreement itself, and provide an incentive for the party subject to them to abide by the agreement.
Termination fees are common to service industries such as cellular telephone service, subscription television, and so on, where they are often known as early termination fees. For instance, a customer who purchases cellular phone service might sign a two-year contract, which might stipulate a $350 fee if the customer breaks the contract. Consumer interest groups have criticized such fees as being anti-competitive because they prevent users from migrating to superior services. [1]
In the suburban Atlanta county of Gwinnett, customers were hit with termination fees of over $23 when the county commission chose not to renew the contracts of the county trash collectors in November 2008. The two companies charged this both in violation of county law and in breach of contract.
In mergers and acquisitions termination fees are often levied in the event that one party fails to consummate a merger—for instance, because it was unsuccessful in getting shareholder approval or because it agreed to a competing offer. For instance, in 2005 Johnson & Johnson agreed to acquire Guidant, but Guidant later accepted a competing offer and was subject to a termination fee of $705 million.
These termination fees have been criticized as well. Shareholders in companies being purchased sometimes believe that termination fees are too high, and instead of representing the costs that the purchasing party would suffer should the deal fall through, instead act as a way of forcing shareholders and directors to accede to the deal. [2]
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, business organizations, or their operating units are transferred to or consolidated with another company or business organization. This could happen through direct absorption, a merger, a tender offer or a hostile takeover. As an aspect of strategic management, M&A can allow enterprises to grow or downsize, and change the nature of their business or competitive position.
NTL Incorporated, branded as ntl:, was a United States-listed British company founded in 1992, which provided cable television, cable internet and fixed-line cable telephone services. While NTL had its headquarters in New York City, the company's activities focused heavily on the United Kingdom, with operational headquarters in Hook, Hampshire.
Roaming is a wireless telecommunication term typically used with mobile devices, such as mobile phones. It refers to a mobile phone being used outside the range of its native network and connecting to another available cell network.
A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee and the person who has the benefit of the lien is referred to as the lienor or lien holder.
Comcast Corporation, formerly known as Comcast Holdings, is an American multinational telecommunications and media conglomerate incorporated and headquartered in Philadelphia.
In the United States, a car dealership is a business that sells cars. A car dealership can either be a franchised dealership selling new and used cars, or a used car dealership, selling only used cars. In most cases, dealerships provide car maintenance and repair services as well as trade-in, leasing, and financing options for customers.
A lease is a contractual arrangement calling for the user to pay the owner for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial or business equipment are also leased. In essence, a lease agreement is a contract between two parties: the lessor and the lessee. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. The lessee also agrees to abide by various conditions regarding their use of the property or equipment. For example, a person leasing a car may agree to the condition that the car will only be used for personal use.
An employment contract or contract of employment is a kind of contract used in labour law to attribute rights and responsibilities between parties to a bargain. The contract is between an "employee" and an "employer". It has arisen out of the old master-servant law, used before the 20th century. Employment contracts relies on the concept of authority, in which the employee agrees to accept the authority of the employer and in exchange, the employer agrees to pay the employee a stated wage.
Bank of America Home Loans is the mortgage unit of Bank of America. It previously existed as an independent company called Countrywide Financial from 1969 to 2008. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of the United States GDP, a proportion greater than any other single mortgage lender.
Charter Communications, Inc., is an American telecommunications and mass media company with services branded as Spectrum. The company is headquartered in Stamford, Connecticut.
Liquidated damages, also referred to as liquidated and ascertained damages (LADs), are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach. This is most applicable where the damages are intangible.
Guidant Corporation, part of Boston Scientific and Abbott Labs, designs and manufactures artificial cardiac pacemakers, implantable cardioverter-defibrillators, stents, and other cardiovascular medical products. Their company headquarters is located in Indianapolis, Indiana. Their main competitors are Medtronic, St. Jude Medical, and Johnson and Johnson.
Virgin Media Limited/Virgin Media O2 Limited is a telecommunications company from Britain, founded in 2007, which provides telephone, television and internet services in the United Kingdom. Its headquarters are at Green Park in Reading, England. It is owned by Virgin Media O2, a 50:50 joint venture between Liberty Global and Telefónica.
Unicel was a brand of mobile phone service from Rural Cellular Corporation. Service was provided in northern Minnesota, northern New England, Mississippi, Alabama, eastern Washington and Oregon, and adjacent areas. The company was headquartered in Alexandria, Minnesota. Until 2005, RCC also operated 850 MHz cellular service under the brand name Cellular 2000. On January 25, 2009 Verizon Wireless officially took over all operations of Unicel.
Transat A.T. Inc. is an international, vertically integrated tour operator with nearly 20 business units in 8 countries. The company is headquartered in Montreal, Quebec, Canada.
Concert Communications Services was a $1 billion joint venture, originally launched in June 1994 by BT Group and MCI Communications. Portugal Telecom became a partner in 1997.
Tag along rights (TARs) comprise a group of clauses in a contract which together have the effect of allowing the minority shareholder(s) in a corporation to also take part in a sale of shares by the majority shareholder to a third party under the same terms and conditions.
Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo and Company in 2008, Wachovia was the fourth-largest bank holding company in the United States, based on total assets. Wachovia provided a broad range of banking, asset management, wealth management, and corporate and investment banking products and services. At its height, it was one of the largest providers of financial services in the United States, operating financial centers in 21 states and Washington, D.C., with locations from Connecticut to Florida and west to California. Wachovia provided global services through more than 40 offices around the world.
The history of AT&T dates back to the invention of the telephone. The Bell Telephone Company was established in 1877 by Alexander Graham Bell, who obtained the first US patent for the telephone, and his father-in-law, Gardiner Greene Hubbard. Bell and Hubbard also established American Telephone and Telegraph Company in 1885, which acquired the Bell Telephone Company and became the primary telephone company in the United States. This company maintained an effective monopoly on local telephone service in the United States until anti-trust regulators agreed to allow AT&T to retain Western Electric and enter general trades computer manufacture and sales in return for its offer to split the Bell System by divesting itself of ownership of the Bell Operating Companies in 1982.
Ting Mobile is an American mobile virtual network operator owned by Boost Mobile. Originally established in February 2012 by Tucows, Ting provides cellular service in the United States using the T-Mobile and Verizon networks. The service is sold off-contract with billing that adjusts the cost of service based on actual customer usage.