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TJ, Esq.
TJ, Esq., Attorney
Category: Legal
Satisfied Customers: 12250
Experience:  JD, MBA
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How legal is an automatic renewal clause on contract

Customer Question

how legal is an automatic renewal clause on contract for vehilcle GPS system. These are tracking units for my work vehicles and use cellular cell sites for locating. My 3 year contract ended June 2011 and is being automatically renewed on Aug anniversary date. I canceled Jan 2015. They are telling me it is not per their cancellation time table. They are billing me now for past usage of over $14,000.00 Can you help me
Submitted: 1 year ago.
Category: Legal
Expert:  TJ, Esq. replied 1 year ago.
Hello and thank you for the opportunity to assist you. My name is ***** ***** I will do my very best to answer your legal questions. Unfortunately, automatic renewal clauses are legal and enforceable. This is especially true in this situation where it is a commercial transaction rather than a consumer transaction. But do you agree or disagree that you complied with the cancellation clause in the contract?
Customer: replied 1 year ago.
This renewal clause was not part of the document I signed. The document said I had to go to a website to view all parts of contract. This website stated that renewal was automatic on every year after contract end on the aniversary. I went beyond the contract for over 3 years. I had probems with one of the GPS units that work in my vehicles. The unit was under my premiere service contract but the labor to fix it was not. A newly signed premium customer get all for free as part of the premium service. I have been with this company for over 10 years and never late on payment. I have premium service but I guess not the new premium service so I was upset and cancelled service..Unfortunetly for me it was 45 days past what they say is the deadline before automatic renewal... I have refused to pay them and not used the service for over 1 year..Hence their billing to me
Customer: replied 1 year ago.
Also the last signed contract by me was in June 2008 and expired Aug 2011. I have been going year to year since then with no signed document only there automatic renewal clause
Expert:  TJ, Esq. replied 1 year ago.
Hi again. If it automatically renews every August, then I can see that your cancellation in January would not be effective retroactively. But it should be effective for the following August (unless the contract states otherwise, like a cancellation is only valid within 60 days prior to renewal). What does the contract state about cancellation?
Customer: replied 1 year ago.
I think so I am trying to find it online as I do not have a copy of it. I recently looked at it and believe it stated the cancellation is only good for 90 days. I cancelled end of January 2015.
Expert:  TJ, Esq. replied 1 year ago.
Hi again. If the cancellation is only good for 90 days, that means that you must cancel within 90 days of the August renewal date. In other words, the cancellation in January expires in March, and since you can't cancel in March, the cancellation is ineffective.
Customer: replied 1 year ago.
Actually I just found the information. Is there a way I can send it to you
Expert:  TJ, Esq. replied 1 year ago.
You can upload PDFs and other types of documents to this website. You should be able to see a toolbar with various buttons, one of which is to upload docs.
Customer: replied 1 year ago.
I think I sent it..Did you get it
Expert:  TJ, Esq. replied 1 year ago.
Got it. Taking a look now.
Expert:  TJ, Esq. replied 1 year ago.
Hi again. This language is the key: "unless written notice was received by either party by at least 30 days prior to the expiration date." In a nutshell, you need to send the other party written notice that you are terminating the contract more than 30 days before the date that the contract will renew. So, if the contract will renew on August 1st, then you need to give written notice by July 1st. However, this language may also be helpful: "The Agreement may be terminated on 90 days written notice if the other party is in breach of any of the material terms of the Agreement, and such breach is not cured within the 90-day notice period." That language means that if the other party breached the contract, which you indicated may be the case, then you can give a 90 days written notice which states that if the breach is not cured within 90 days, then the contract is terminated. I hope that helps. Please let me know if you need further clarification, and please remember to provide positive feedback. Thank you.
Expert:  TJ, Esq. replied 1 year ago.
Hello again. I didn't hear back from you, so I'm just checking in to make sure that you don't need more help on this issue. If not, then please remember to provide a positive rating to close out this question (and please remember that your positive rating is the only way that I'll get credit for helping you, so I greatly appreciate it). Thank you!