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I hope this message finds you well, present circumstances excluded. I am a licensed attorney with over a dozen years of experience handling matters such as this one. It is a pleasure to assist you today.
The short answer is that this is legal and binding, in most cases. The issue here is normally handled through the initial contract that you sign for when you receive this service. There is normally small print that states that the contract will auto-renew unless there is express written notice provided within 30, or even 60, days before the expiration of the contract.
This is unfortunately very common and is legally enforceable. The only way it would not be enforceable would be if the penalty provisions for violation are extreme relative to the overall value of the service and/or contract.
I wish I had better news for you here. Ask them to show you specifically in your contract where the language is located that calls for this to take place. If it is not there, then this is not enforceable.
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Yes, I think that would be considered extreme. I think that $10K would be more normative under the circumstances - and even that could be construed as extreme unless cancellation involves removing phone lines and other infrastructure.
First off, you need to cite the specific language in the contract to which they are using as their basis.
You can then state that, "While it is acknowledged that there is an automatic renewal clause in the contract that started this arrangement, your proposed amount to settle any perceived breach or early withdrawal is clearly unreasonable and legally unenforceable. We are having to exit this arrangement based on unforeseen business reasons that are outside of our control. Moreover, the service you have provided is no longer worth the expense that we incur to maintain it. To that end, the monthly expense, in and of itself, is unreasonable relative to the product and would be legally unenforceable. For those reasons, and in view of our contract, we are willing to negotiate a reasonable settlement amount, not to exceed $10,000 in total, which can be paid over two months. If you are unwilling to negotiate a reasonable settlement amount, then we will be forced to implement other legal means to defend out position relative to your unreasonable, arbitrary and capricious demands."
Let me know if you have any other questions. Please don't forget to rate my answer positively as well.
Just checking in this morning to see if you had any other questions or comments. I want you to be as comfortable as possible as you move forward on this issue. Thanks