What is the law regarding recurring payment agreements?
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What is the law regarding recurring payment agreements?
This is for agreements that customers have signed that state the company can continue to charge payments until receiving written notice to stop. Is there any expiration to this? My wife has been charged monthly fees from a tanning salon and in getting pregnant and now giving birth to our little one, has not used any services whatsoever in over a year. I wrote in and they said they will not refund any charges. Curious if there is any law in place that would protect us in this situation?
Asked on April 11, 2013 under General Practice, Washington
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
What you are referring to here is something known as an "evergreen clause". This is an automatic renewal clause in a contract provides that the term of the contract will automatically renew at the end of the specified term, unless a party to the contract provides advance notice of their intent to cancel. Such notice must typically be given by a designated deadline.
An automatic renewal clause is legal and will be enforced unless there is a statute that prohibits it or 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).
To be sure of the law in your state consult with a business law attorney or contact your state's Attorney General's office.
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