Open the 
Service
Contract window.
Press F5 to open the Service Contract List window and select the service contract you want to cancel. Click OK to open the Service Contract window for that service contract.
Click Functions, Open to open the service contract for modification.
On the Details tab, in the
Cancel Reason Code field, click
the AssistButton 
to see the Reason Codes window. Select the relevant
reason code, and then click OK
to copy it into the field. You can set up and add more reason codes
directly in the Reason Codes
window.
Note that, if the check box in the Use
Contract Cancel Reason field in the Service Mgt. Setup window is selected, you
have to specify a cancel reason code when canceling contracts.
In the Status field, select Canceled.
If there are any unposted invoices or credit memos for the contract you want to cancel, a confirmation message will appear. In the message box, click No to return back to the contract and post the documents or Yes to continue the contract cancellation process.
If there are any opened prepaid entries for the contract you want to cancel, a confirmation message will appear. In the message box, click No to return back to the contract and create a credit memo or Yes to continue the contract cancellation process.