The fast growing adoption of smartphones has accentuated the importance of privacy in the context of mobile computing. While most research has focused on general privacy concerns and their impact on intentions to disclose personal information, little is known about how perceptions of a privacy breach affect ongoing relationships between users and mobile providers. To address this gap, we develop a research framework grounded in psychological contract theory. We test this framework with a survey-based study of smartphone users who are presented with a scenario of a privacy breach. We find that perceptions of privacy breach negatively affect trust and commitment and lead to an increase in cynicism. In turn, trust, commitment, and cynicism are highly predictive of smartphone user intention to terminate the relationship with the mobile carrier. We also evaluate the effects of perceived availability of alternatives and contractual lock-in. The nomological framework developed in the current study provides the foundation for further investigation of perceived privacy breach across practically relevant contexts.