What can I do if I signed a contract with a linen company that automatically renews?
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What can I do if I signed a contract with a linen company that automatically renews?
It was a 5 year contract. The contract was fulfilled but when I went to cancel it in year 6, they have in fine print that it will automatically renew for another 60 months. Is that legal? Do I have to remain with them another 60 months? Do I have any recourse?
Asked on November 4, 2015 under Business Law, North Carolina
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
What you have here is something known as an "evergreen clause". Typically, a company has the opprotunity to cancel a contract but typically has to give notice, for example, about 60 days prior to the end of the initial contract end date. However, frequently the window of opportunity to terminate such agreement passes and the business finds itself on contract for another year or period of years.
In the instance of commercial contracts, courts often strictly construe these situations if the contract language is clear and unambiguous. Therefore, such a contract extends automatically for another term.
A few jurisdictions have passed laws that may make it difficult for vendors to enforce these automatic renewals, however most of these laws apply only to contracts between businesses and consumers.
Without reading the exact terms of the contract in question it is hard to say more. Right now, you should consult directly with a businss law attorney in your area. They can best advise you as to your rights/remedies under the circumstances.
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