What to do about a contract that automatically renews for 5 years?

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What to do about a contract that automatically renews for 5 years?

We have a contract with a national vendor for on-hold phone messages. The original contract was for 5 years. It automatically renewed at the beginning of last year for an additional 5 years. I would understand the contract renewing for an additional year but for an additional 5 years seems excessive. Is there anything that can be done to get out of the contract?

Asked on January 31, 2011 under Business Law, Illinois

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Such a contract provision is known as an "Evergreen clause". This refers to a non-expiring contract term, which is either accomplished: (1) by expressly stating that the contract will not expire unless terminated in advance for cause (or without cause) or that it will renew automatically unless terminated in advance; or (2) by not stating an expiration date.  Generally, outside of the area of consumer services and the like, such a provision is legal to the extent that it was bargained for and made part of an otherwise enforceable contract.  Where a party is in default, the party seeking enforcement has all the rights and remedies provided under law.


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