You Need to Watch Out for Automatic Contract Renewals

We get a lot of questions about automatic contract renewals over on the FindLaw Answers Consumer Issues board.  Are they legal? Can they be enforced? Is there any way to get out of them?

Unfortunately, the answers to these questions aren't particularly favorable. Ordinarily, an individual must affirmatively signal his desire to enter into a contract. But when there is a history of prior dealing, silence may be sufficient to prove assent. Such is the case with automatic contract renewal clauses. 

When you sign a contract that includes an automatic renewal clause, you are preemptively agreeing to extend the contract at a later date. If you don't actively cancel the renewal, your silence is to be considered an affirmation of this agreement. This is why you should always read contracts and make note of any automatic renewal clauses. It's also a good idea to write a note on your personal calendar reminding you to send in a cancellation.

If you failed to do this, you aren't necessarily without recourse. There may still be a way to get out of an automatic contract renewal.

A number of states have consumer protection laws that deal specifically with automatic renewal clauses. Illinois law, for example, demands consumers be given at least 30 days notice before the cancellation deadline if the original contract was for 12 months or more. California law, in contrast, only requires companies to make consumers adequately aware of the contract term at the time of signing.

If the company you are dealing with failed to strictly adhere to your state's laws, you may be able to void an automatic contract renewal. So do a little research and see if your opponent violated the law.

Related Resources:

• Contract Law (FindLaw)
• Reviewing a Lease Checklist (FindLaw)
• Will Your Contract Be Enforced Under the Law? (FindLaw)