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Service Agreement Renewal Clause

In 2006, New York passed a law providing that automatic renewal provisions are not applicable in service, maintenance or repair contracts unless “the person providing the service, maintenance or repair at least fifteen days and not more than thirty days before the time limit for notification of such notification, written notification of the maintenance or repair, which is served in a personal capacity or by registered letter and which draws the attention of the person to the existence of such a provision in the contract. Also known as a self-extension clause or evergreen, it aims to permanently renew a contract if the termination does not occur within a generally specified and relatively short period of time (for example. B 30 days before the end of the period of validity). Companies should pay attention to the conclusion of contracts containing automatic extension clauses, as an unlawful termination of the contract for an extended period could give rise to a claim for damages for infringement. Failure to comply with these legal requirements may render an automatic extension clause inapplicable and lead to the termination of the contract at the end of the current period. Accordingly, companies should be alert to the existence of automatic renewal clauses in existing and new service contracts and, if service contracts do contain these clauses, ensure that there are appropriate notification processes to remind you of important renewal dates. It was only this year that Wisconsin passed an automatic extension law that undermines the applicability of automatic renewal clauses in some business-to-business contracts. The law creates specific obligations regarding the advertising and notification of renewal contracts. In particular, the Wisconsin Statute requires the publication of an automatic extension clause at the time of entering into the contract; and (2) formal notice to a customer whose contract is otherwise renewed for an additional term of more than one year. Commercial contracts in the areas of leasing, digital media, insurance, telecommunications and fitness often contain the Evergreen clause in their contractual terms.

Contracts, including “Auto-Renéwal” clauses, may be terminated on the basis of a breach of contract, mutual agreement between the parties and certain special circumstances. [2] Other related clauses are the termination effect and survival clause clauses. Another economically important aspect of the clause is its impact on the profitability of the company. [1] Termination of the contract can have a negative impact on a company`s revenues, which management can cover by increasing the costs of terminating the contract for consumers. [8] In accordance with traditional economic theory, a rational economic operator would opt for the economically superior alternative which, in this case, would be the renewal of the contract. [1] [9] Extension under new conditions. If [PART B] opts for an extension in accordance with paragraph [RENEWAL OPTIONS], the parties shall enter into a new franchise agreement under [PARTY A`s] franchise agreement in force for that purpose. Steve Dutton is an attorney in the litigation department of the law firm of McLane, Comte, Raulerson and Middleton, Professional Association.

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