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socrateaser
socrateaser, Attorney
Category: Business Law
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Experience:  Retired (mostly)
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Im a non-profit board and care for mentally ill in Los Angeles

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I'm a non-profit board and care for mentally ill in Los Angeles County Calif. that 3 years ago my CFO signed waste removal contract with Waste Management Inc. It had a 3 year automatic renewal clause unless we gave notice within 90 to 180 days. 3 years expires 01/01/2011.We didn't serve notice within 90 days. Also there is a clause that gives them right of first refusal to meet or beat competitor’s price. WM price is 30% higher than local competitor. There are no issues of poor service. Renewal clause is not in 8pt bold print if that matters. The want me to sign new agreement for 36 months but at the end if I don't give notice it goes month to month (not automatic renewal) which leads me to believe there is a new law effective Jan. 01. Am I bound to this contract? www.healthview.org CEO Vernon Gettys
There is no express California law prohibiting or limiting automatic contract renewals. However, a court has the power to refuse to enforce a contract or a clause in a contract that is unconscionable (shockingly unfair) when made. Civ. Code § 1670.5(a). And, If the buyer's consent to a contract was induced by the seller's fraud, or was given by mistake, or under duress, menace or undue influence, the buyer can rescind the contract. Civ. Code § 1689(b).

For example, if the renewal clause is inconspicuous, so that it would be easily missed at signing, that could invalidate the renewal clause for lack of actual consent. You could also argue that a 90 day notice of nonrenewal is unconscionable, because 25% of the contract remains unperformed on a 12-month contract, so you don't have a reasonable opportunity to determine whether or not you wish to cocntinue service. Moreover, the waste management company is not injured by a later notice, because it must continue to service your general area, regardless of whether or not you are a customer. So, a later termination notice does not prejudice the vendor's position.

In either case, you would have to fight it out in court (or arbitration, if the contract calls for alternative dispute resolution).

Hope this helps

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Customer: replied 5 years ago.

Does the fact that the renewal clause is not 8 pt bold face font have any merit in California law like it does in property lease renewals. Also are you aware of any changes in the law because both new contracts which are for 36 months (Waste Management and new vendor) have changed from an automatic renewal if no notice is given to month to month at the end of the 36 months giving me the suspicion that the law has changed recently?

 

I personaly have contacts written that vendor notify me at least 90 days ahead of time in writing. Most are willing to comply.

Does the fact that the renewal clause is not 8 pt bold face font have any merit in California law like it does in property lease renewals.

A: The law doesn't apply to ordinary contracts. You could use it as evidence of what the legislature would view as reasonable in a contract. But, whether or not a judge would buy that argument is unknown.

Also are you aware of any changes in the law because both new contracts which are for 36 months (Waste Management and new vendor) have changed from an automatic renewal if no notice is given to month to month at the end of the 36 months giving me the suspicion that the law has changed recently?

A: I'm aware of no new law on this issue (I've looked, by find nothing). Frankly, it's the sort of thing that probably would be found in a municipal or county code. So, you would have to search your local ordinances. See http://www.municode.com/.
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