Re: Self renewing contracts?
- From: Mike Sokoly <secure15@xxxxxxxxxxxxx>
- Date: Thu, 08 Sep 2005 21:51:34 -0400
Here's the Deal in New York
NY CLS Gen Oblig § 5-903 (2004)
§ 5-903. Automatic renewal provision of contract for service, maintenance or repair unenforceable by contractor unless notice thereof given to recipient of services
1. As used in this section, "person" means an individual, firm, company, partnership or corporation.
2. No provision of a contract for service, maintenance or repair to
or for any real or personal property which states that the term of
the contract shall be deemed renewed for a specified additional
period unless the person receiving the service, maintenance or repair
gives notice to the person furnishing such contract service,
maintenance or repair of his intention to terminate the contract at
the expiration of such term, shall be enforceable against the person
receiving the service, maintenance or repair, unless the person
furnishing the service, maintenance or repair, at least fifteen days and not more than thirty days previous to the time specified for
serving such notice upon him, shall give to the person receiving the
service, maintenance or repair written notice, served personally or
by certified mail, calling the attention of that person to the
existence of such provision in the contract.
3. Nothing herein contained shall be construed to apply to a contract in which the automatic renewal period specified is one month or less. ould be on firmer ground claiming that the initial contract automatically renewed. However, the subscriber might successfully defend by claiming the by sending out the proposed new contract which never got signed, that the old contract ended and that the relationship continued without any written contract, therefore terminable at will. It would probably be a better practice to decide whether you want to rely on the renewal clause or a new contract, not both.
Automatic Renewal Provision
Why is there such a problem with this topic? Alarm contracts have automatic renewal clauses in them. Some contracts are for an initial term of 3 to 5 years, some 10 or more. The renewal can be for 1 year, 5 years, or whatever you make it.
An automatic renewal clause should and will be enforced (its legal) unless:
1. there is a statute that prohibits it
2. there is legal case law that refuses to enforce it (usually on the grounds that the particular provision is unconscionable [shocks the conscience of the court).
I am not aware of a Federal law that deals with the automatic renewal clause (if you know of one let me know the statute). Some states do have statutes that deal with the issue. In New York for example an automatic renewal clause is not enforceable unless the provider of the service (the alarm company) sends a separate notice advising the customer of the provision. The notice has to be sent by certified mail or personally delivered between 15 and 30 days prior to the renewal date. Failure to give the notice renders the automatic renewal provision unenforceable.
Check the statutes in your state to find out if there is a similar provision that you must comply with.
If there is no state law provision then you only need to be concerned that your contract term does not run afoul of common sense or decency. A 5 year initial term with a 10 year renewal written in obscure print buried in the contract may not be enforced. I think you get the idea. The standardized contracts that I offer to the trade are 5 year initial term and 5 year renewal. We have not had difficulty with those terms. We have also had success with 10 year initial term contracts with 5 year renewals.
For a list of the standardized contracts see our web site at
Some alarm companies have a policy of sending out new contracts rather than relying on their renewal provision. Unless the new contract is for an extended period and the renewal is for a shorter period, like one year, I don’t see the wisdom in going to the trouble of preparing and sending a new contract. If you are required to send a notice of the automatic renewal you should comply with that; after all, the new contract may not get signed and returned.
Another little mistake I think some companies make is to send out a new contract and call it a renewal contract. The phrase "renewal contract" has caused many different types of problems in litigation. One thing you need to be mindful of is that the contract, now labeled a "renewal contract" may have several provisions in it that have triggering events that will not be taking place with the renewal contract, such as an installation of equipment, or a provision that says the contract is for 5 years after the installation of equipment. In a renewal situation that provision can cause the subscriber to claim that the equipment was installed long time ago when the first contract was signed and therefore the 5 years ran before the renewal contract was even signed, thereby permitting the subscriber to cancel anytime; not a position you need to litigate and one you can easily avoid by knowing what is in your contract.
If your contract has an automatic renewal provision in it then I suggest you rely on it. If you want to have a new contract signed during the term of an existing contract that is fine. You should probably offer some incentive for a subscriber to sign a new contract, such as a free inspection, free piece of equipment, an upgrade in equipment or a rate freeze or decrease. Giving something for the new contract will help establish your consideration and avoid an issue that the subscriber was duped into signing a new long term contract. Let a sense of fairness be your guide.
Many Thanks to Ken Kirschenbaum @www.alarmcontracts.com for the Above Info
I can auto renew provided the renewal term is specified in the contract and is not limited by other state laws. In some states it can only renew for one year and in some states you must notify the customer just before the automatic renewal takes effect.
Tell the customer to send a certified letter to p1 requesting a copy of her contract - they have to provide it cause thats the law in every state - and when you get it check to see if it is actually a valid contract. If they fail to provide a copy of the contract send another letter telling them any agreement is cancelled effective immediately.
Now, it may be that the contract they have is not even a contract the customer signed; it may be a contract somebody else signed and then they moved into the house and assumed it. Its not even valid in that case.
If the customer signed it and they only lease the property its not any good as the actual property owner would have to also sign and agree to it. If its a rental property the contract is pretty much worthless.
The contract may not even have an automatic renewal clause in it
If the monthly rate increases you always have the right to cancel at that time and not pay any increased rate of course the company could then decide not to increase your rate and you couldn't cancel.
You may get lucky and discover nobody representing the company ever signed the contract or that the contract cannot be transferred to p1 from whomever installed the original system.
In many contracts if some fatal happens to the system and you choose not to invest the money to replace it the contract will terminate at that point.
<paulctr@xxxxxxxxxxxxx> wrote in message news:nv31i1d1veormmtml81ss2841tntapqk0i@xxxxxxxxxx
Are these legal for monitoring? I have a potential customer that
has monitored with pro1 for 7 years. She tried to cancel and they
told her she would have to wait till next July because her 3 year contract had self renewed.
I live in SC. Any comments?
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