BOSTON (TheStreet) — What do Tiger Woods, the New Jersey Nets and Verizon (Stock Quote: VZ) customers with iPhone envy have in common? Contracts they'd love to escape.
Woods' prenuptial agreement, the Nets' arena lease that runs through 2013 and Verizon's contracts for "advanced devices" seemed acceptable at signing. But these agreements can become expensive problems when better opportunities or life-changing events arise. Verizon charges defectors $350 in early termination fees. The Nets face a $7.5 million penalty if they switch arenas. And Woods stands to lose nearly half of his $600 million fortune for violating his marriage contract.
"When people want or need to get out of contracts, they'll assume they have a right to get out of that contract," says John Sternal, spokesman for LeaseTrader.com. "That's not the case in many situations."
Such is life in contractual America, where 65% of consumers surveyed by ComScore in December said they planned to ditch their current mobile phone and buy a Research In Motion BlackBerry within the next three months. Include the 20% who are eyeing iPhones and the 17% going for Google Android devices, and you're looking at prorated cancellation fees of $200 for T-Mobile and Sprint Nextel (Stock Quote: S) and $175 for AT&T (Stock Quote: T).
"Every industry needs to realize that times are changing and we live in a lease lifestyle society. We live for today and not tomorrow," Sternal says. "Companies are always parading new things out in front of us and we always want latest and greatest."
So how do you get out of it? Money is usually the only answer. Dying typically transfers the onus of a consumer's contract or lease to the cosigner or next of kin. Cell phone companies usually scale their early termination fees based on length of service, while adjustable rate mortgages have been notorious for inflicting penalties for early repayment.