Does a self-renewing service agreement with customers allow a provider to raise rates without giving notice if there is no specific language to that effect?

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Does a self-renewing service agreement with customers allow a provider to raise rates without giving notice if there is no specific language to that effect?

I’m the GM at a service company. We have customers that sign up for various periodic service (monthly, bi-monthly, quarterly, semi-annual). These are “evergreen” contracts that exist until either party cancels in writing with 10 days notice. There is currently no language that states that we can raise rates; there is only language that agrees to a specific rate for the specific periodic service. Owners of the company want to increase rates without giving notice. Regardless of impact to customer, I am concerned about legality of us raising rates on a “fixed” contract.

Asked on December 27, 2011 under General Practice, Washington

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A definitive answer depends on the exact language of the contract; your firm should have its contracts reviewed by an attorney. As a general matter, if a contract automatically renews, it would renew on the *same* terms--including rates--unless there is something in the contract allowing increases (e.g. language letting you pass on cost increases; allowing adjustments for inflaction; allowing increases with renewal or upon notice; etc.).


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