Terminating a service contract for an extended period of time can be both difficult and costly. Similarly, parties who, under a persistent clause, are not reluctant to other terms of contract, should also be attentive to new legislation that can defend an automatic right of renewal. However, the federal government has recently released bills to extend the protection of abusive clauses for consumers to contracts for small businesses in a normal form that is less than a prescribed threshold. Contractual clauses allowing a party to unilaterally renew a contract have been characterized by the government as unfair clauses for small businesses, particularly in the waste management sector. The parties can renegotiate or amend the legal agreement. This could be done by terminating the current contract and developing a new treaty with the renegotiated commitments. If a party did not comply with its contractual obligations, the contract would be terminated independently of the clause and, in some cases, compensation and comparisons may be due. It should be noted, however, that some countries have legislation that regulates the duration of the offence under which the contractual relationship can be cancelled. [1] Finally, contracts may also be terminated due to certain circumstances in areas such as public health. [2] It was only this year that Wisconsin passed automatic renewal laws regarding the applicability of automatic extension clauses in certain business-to-business contracts. The statute establishes a specific advertisement and the publication of renewal requirements for contracts. In particular, Wisconsin law requires: (1) an automatic renewal clause is disclosed at the time the contract is concluded; and (2) a formal warning to a client whose contract will also be renewed for an additional period of more than one year.
Amazon.com, a U.S. multinational e-commerce company, offers its consumers a variety of online services such as Amazon Prime, Amazon Web Services, Alexa and so on. [22] Amazon Prime is a paid subscription service that provides consumers with exclusive content and services that will be automatically renewed towards the end of the period. [23] A similar business model has been adopted by online audio services companies such as SoundCloud and Apple Music. [24] [25] An automatic extension clause is generally as follows: these types of clauses may appear in different contracts, but are particularly common in service, distribution and supply contracts. Some leases also contain a provision that the tenancy agreement will be automatically extended by an additional year if the tenant does not specify that they do not wish to renew it until a certain date. According to the above theory, economic operators would take into account the costs of contract renewal, (new) negotiation and termination prior to the decision-making process. Any change in the terms of the contract may result in higher „transaction costs” than the renewal of the same contractual terms. The fact remains that there are costs in both situations. However, the contracts no longer apply at the end of the term of the contract, so there are no costs associated with termination of the contract. [1] Companies should be mindful of contracting with automatic renewal clauses, as an unlawful termination of the contract for an extended period of time could result in a claim for infringement.
