Is My Automatically Renewing Contract Enforceable?

The Wisconsin legislature, effective May 1, 2011, has implemented strict notice requirements for any automatically renewing “Business Contracts” entered into after May 1, 2011.

The rule is codified through Wis. Stat. 134.49, and sets forth that any automatically renewing contract that does not make the following disclosures, will be held to be unenforceable as to the renewing term.

1. A statement that the contract will be renewed or extended unless the customer declines renewal or extension.
2. A statement indicating the duration of the additional contract period that would result from an automatic renewal or extension period.
3. A statement indicating whether an increase in charges to the customer will apply upon an automatic renewal or extension.
4. A description of action the customer must take to decline renewal or extension.
5. The date of the deadline for the customer to decline renewal or extension.

The statute also imposes new obligations on contracts in existence prior to May 1, 2011 that have an initial term of more than one year. If your business utilizes, or intends to utilize automatically renewing contracts, you should contact a Wisconsin Lawyer to ensure that they are in compliance with Wis. Stat. 134.49 and that they will be enforceable.

There are two purposes for a contract: 1) is to make sure the parties understand the deal, and 2) make sure one party or the other can enforce the deal if need be. If you don’t have a well written contract, you may not accomplish either of those goals.

What Happens if I get Sued? Part 1- Pleadings

The pleadings stage is the initial stage of any litigation. The Plaintiff (or the person bringing the action) will file a summons and a complaint. The summons will indicate that the Defendant(s) have either 20 or 45 days (depending on the allegations made) to answer the complaint.

The complaint will contain all of the allegations that the Plaintiff says the defendant(s) did or did not do. For example you may see a complaint containing several counts, one may be breach of contract and another may be Fraud or Misrepresentation although they may all be referring to the same facts.

As a defendant you have the obligation to file an answer either 20 or 45 days (depending on what is plead) of being served with the summons and complaint. If you do not answer, a default judgment may be entered against you. (Plaintiff automatically wins). If you are a corporation or an LLC, you have to get a lawyer to enter an appearance and file an answer for you.

Your answer to the complaint is not the time for you to make your case as to why you are right and they are wrong, but rather is simply a format for admitting or denying each allegation made by the Plaintiff. Additionally the defendant(s) will take this opportunity to indicate any affirmative defenses and put forward any counterclaims or cross claims that they may have.

Once all of the pleadings have been filed, and any necessary amendments have been made, the discovery phase of litigation begins.

Part 2 of 5, “Discovery”

What happens if I get sued? An overview of Litigation in Wisconsin

If you run a business, sooner or later you will have a disagreement with a customer, contractor, or vendor that may lead to litigation. For many business owners litigation, and what is entailed, is clouded in mystery. The next few articles are going to attempt to illuminate some of those mysteries and explain the process, in general terms, for litigation with a bend towards the local rules and practices of Milwaukee County.

Please realize that each individual case is going to have its own intricacies and variables, and I certainly would not recommend using these articles as a road map to represent yourself, as this outline will be very broad and may be missing key elements that are essential for your case.

The basic steps of any litigation are the following:

– Pleadings
– Discovery
– Motions
– Mediation
– Trial

While most cases never make it all the way to trial, you can expect anywhere from 18-24 months to go from initial filing to Jury trial.

The next five articles will review each of the above steps and try and give you an overview of what is involved.

Part 1 of 5, “Pleadings”

Do I need a DirecTV Commercial License for my bar?

The short answer: YES. DirecTV is cracking down on Commercial Misuse over the last year and a half, particularly misuse of NFL Sunday Ticket, resulting in huge fines. Previously DirecTV had limited its focus to just those who were using “Pirate” boxes or illegal access cards to get at its content. Now, DirecTV is unleashing its “Office of Signal Integrity” on commercial businesses large and small, especially sports bars, showing its content without paying for a commercial subscription. It even maintains an anti-piracy website listing all of its recent settlements and judgments against those both violating the piracy rules and what they have dubbed “Commercial Misuse” ranging from $50,000 to $100,000 settlement awards.

DirecTV has two different types of subscriptions, residential or commercial. The residential rates range from $30 per month to about $90 per month. In contrast, the minimum commercial package starts at $151.99 per month and maxes out at $361.99 depending on the size of your establishment. Add in the fact that commercial NFL Sunday Ticket prices range from $869 per season all the way to $45,799 based on your establishments fire code occupancy, you can see why business are trying to avoid paying for commercial licenses.

However, DirecTV has been making these business pay, and in a big way. Its anti-hacking website lists dozens of examples of $50,000+ settlements for violations of showing DirecTV programming without paying its commercial license rates. DirecTV also has not limited its blitzkrieg to large commercial bars, small mom and pop establishments are getting slapped down with four and five digit fines. Its main cause of action is based on 47 U.S.C. §605 “Unauthorized Publication or Use of Communications” which sets out damages of $1,000 to $100,000.

DirecTV has been smart about gathering its evidence and making sure that it can prove its case, but never actually has to. By forcing violators to settle regardless of how “innocent” or “grievous” their violation is out of fear of exorbitant legal fees, DirecTV manages to keep its claim of action intact and unchallenged by an actual fact finding hearing. DirecTV knows that it will be successful in summary judgment, be awarded the statutory fees as well as attorney’s fees. So, all of you small businesses, especially bars, that think that you are saving a few bucks a month by not paying for the commercial license, you are playing with fire, and one day soon may end up with a demand for a $50,000+ settlement to avoid a protracted law suit. If you get one of these demand letters make sure to contact an attorney and see if at the very least the damage can be minimized.

What Happens when one Partner Leaves a Partnership?

In a January 2007 decision, Estate of James H. Matteson v. Robert R. Matteson et al. , the Wisconsin Appellate court takes the time to further clarify its decision from Lange v. Bartlett , 121 Wis. 2d 599, 602 which stated

[W]hen one partner leaves a partnership and allows the other to continue the business, the departing partner is entitled to receive, in addition to a share of the value of the business, a share of the profits until the business is wound up. We also held that the continuing partner is entitled to be compensated for work done during this time.

In this case, Robert and James had a partnership in a radio sales and service business. In 2001, James left the partnership, but Robert continued the business as an LLC. They never agreed how James should be compensated for his half of the partnership, and unfortunately soon thereafter James died. His estate filed suit and 3 years of litigation ensued. Read more

Can I sue in Small Claims court for more than $5,000?

The short answer- Yes; but you can only recover damages of up to $5,000 plus statutory attorney’s fees ($250-$500) and court costs. A recent decision in the Wisconsin Court of Appeals Winkler v. Spaman Wholesale confirmed as much when it denied the defendant’s motion to vacate the default judgment for $5,000 because the demand in the complaint was for $8,000. The defendant’s attorney, while trying to get the default judgment set aside and the case reopened, argued that Small Claims court did not have jurisdiction because the amount of the suit was over $5,000. Read more

What if there was no written Contract?

This is an issue that comes up quite often in my Business Litigation Practice. When two businesses, especially small businesses, first get together they are excited to have the service/ a new client and other than maybe a written a proposal have nothing in writing setting out the terms of the agreement.

If everything does not go exactly according to everyone’s plans, this can lead to costly and frustrating litigation. Read more

Can I get attorney’s fees in my business lawsuit?

Everyone always wants them, very few people actually get them. There are generally three ways to get attorneys fees.

One, if they are explicitly granted as a part of a contract for which you are pursuing a breach of contract claim, if you win you will get Attorney’s fees. If you do not, you may have to pay theirs. I am a big advocate of including Attorney’s fees in the provisions of contract, especially if you have chosen not to include a mediation or arbitration clause.

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Anatomy of a Contract (part 3 of 3)

Click the links to get to Anatomy of a Contract part 1 of 3 or part 2 of 3

In part 2 of 3 I mentioned that the “Action” part of a contract is the most important part of a contract; and it is, but mainly because of how it relates to the “insurance” part of a contract. Everything that is discussed below about the “insurance” part is almost useless without a properly written “Action” section of a contract. If however, the “action” portion properly leads into the “insurance” section, you can create a piece of paper that does exactly what it is designed to do, protect your business in case of emergency.

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Anatomy of a Contract (Part 2 of 3)

If you missed “Anatomy of a Contract (Part 1 of 3)click here

In that section I discussed the recitals, or as I refer to it, the “Information” part of a contract. The other two parts are “Action” and “Insurance”. In this post I am going to talk a bit about the “Action” portion of a contract.

To me this is the most important, and often most overlooked part of a contract, especially by those drafting contracts without the help of an Attorney. The most important aspect of the contract is setting out exactly what it is that the parties are contracting for. This takes work and some foresight, but the dividends for spending the extra time upfront pay off 10 fold in its ability to prevent and resolve future disputes.
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