Automatic Contract Renewals

Do you have any contracts that have automatic renewals?  Sometimes there might be automatic renewals in a property lease, but most often they are in business contracts for a service, such as a phone service or vending machine service.

The automatic renewal provision might be a great idea for you.  If the rate stays unchanged, the automatic renewal might allow you to keep getting great service at a steady rate that you can count on.  Or, if there is a rate increase, an automatic renewal will allow you to plan for what the new rate will be.

But an automatic renewal might also be a bad thing.  What if you ‘know’ that your contract was for 3 years and you ‘think’ that you only need to give a 30 day notice at the end of your contract period to be able to end that contract?   What if the contract actually says that you need to give a 90 day notice of intent to not renew?

You guessed it!  If you go past the 90 day notice period, you are now ‘stuck’ with a new contract period!  One that you really didn’t want!

Can you get out of that renewal contract?  Maybe.  But it will be expensive.  You might be able to negotiate with the company to have them let you out of the contract even though the contract you signed was very clear about the notice period.  You might have to take them to court and let the judge or jury decide whether the renewal term was so outlandish that it should not be enforced.

What should you do?

If you are signing a contract (of any kind) check carefully to see the length of the renewal period and also verify the notice requirements.  Then mark your calendars to check on that renewal period at least one month prior to when you need to contact the other side.  That gives you a reminder to at least consider whether or not you want to have an automatic renewal.  And take a highlighter and highlight the automatic renewal and termination notice sections of the contract so that it is easy to see.

It’s also a good idea to review each of your on-going contracts at least once a year to check for upcoming renewals.  Pick a date, any date, and make this a special day!

You can contact Beavers Law, P.C. by calling our office at 757-234-4650 or by visiting us on the web at

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