No, you take the power away from them right this very second. Write them a registered letter stating the terms under which you are willing to give a refund, if any. You do not contact them under any other terms, and do not answer or speak to anything else. Case closed.

If it were me, I would just refund them the remaining days under the contract send a certified cheque, and write "FINAL payment" in the memo line...If they accept his, they have accepted the terms under which you are making an exception to your service agreement. And if sued, I would present this to the judge. More than likely they will be tossed out on their ear.