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 13 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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