What is the law regarding automatic renewal of a contract?
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What is the law regarding automatic renewal of a contract?
My business switched to a telephone carrier 3 yers ago. We were in a 3 year contract, which we fulfilled. During the length of the contract, we were constantly having service outages, billing problems, etc. This week we had another service outage. These outages are greatly impacting our business and I reported the problem. Afterwards, I spoke with someone about cancelling our services and they told me that our contract automatically renewed last month and we would have to pay $3000 in early termination fees. We have read the original papers that we signed to switch and no where on there does it state that we would be subjected to an automatic renewal. Can they hold us to that if it was not included in the original contract?
Asked on October 23, 2012 under General Practice, Alabama
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
Contracts are governed by their terms. The parties to a contract are only obligated to terms that are in a contract. If a contract does not have an automatic renewal term or clause, it should NOT automatically renew; therefore, if there was nothing in the contract about automatic renewal, it should not have renewed on you. Ask the company to refer you to the clause or provision in the contract under which it renewed; if they cannot, you may wish to let them know that you will take legal action, if necessary.
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