Cell Phone Contracts Nowadays, most people have cell phones. It's also true that most people have a negative experience with a cell phone company that imposes early termination fees. When people activate cellular service, they are forced into a binding contract for one or two years. If the customer accepts the contract he will be required to pay the entire duration of the contract or he will be charged a penalty for early termination. However, the days of mobile phone contracts having early termination fees are starting to change. Contract “A contract is a legally binding promise.” Lau, T., & Johnson, L. (2013). Nowadays, when people buy cell phones, they understand that they are making a legally binding promise. However, the customer expects the service provided by the company to be adequate and up to the customer's service standards in return. This is why some mobile phone companies have been in legal battles over their mobile phone contracts. T-Mobile Class Action A few years ago, T-Mobile charged customers a flat rate of $200 regardless of whether or not the customer was at the beginning of the contract or nearing the end. The company attempted to resolve this disagreement with customers through arbitration. However, a California court found the agreement to be unconscionable and unenforceable. “The lawsuit further alleges that the flat early termination fee constitutes “an unlawful penalty under Civil Code Section 1671, subdivision (d), is unlawful under the Unfair Competition Act, and is unconscionable under the Remedies Act legal to consumers." (Turner, 2007) Results of the T-Mobile case With the judge finding what T-Mobile did illegal, the ruling establishes precedence Precedence allows other people... middle of paper.. .t.However, if good faith gestures are not returned to the customer, it could ultimately hurt the company. Competition in this industry is fierce and without contracts that hold customers hostage the cell phone industry will face it. to unprecedented changes. , T., & Johnson, L. (2013). The legal and ethical business environment. Irvington, NY: Flat World Knowledge, Inc. DOI: www.flatworldstudents.comTurner, H. (2007, lawsuit against the early termination of t-mobile). the tariff is approved. Retrieved from http://www.lawyersandsettlements.com/features/cell_phone_early_termination_fees/tmobile-fees.htmlDolcourt, J. (2013, November 13) Why the United States is Ready for a No-Contract Shift (Smartphone Unlocked). http://reviews.cnet.com/8301-6452_7-57612191/why-the-us-is-poised-for-off-contract-shift-smartphones-unlocked/