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.
It seems quite often you see contracts that contain provisions similar to the following:
Either party may cancel this contract at any time by giving the other party 60 days written notice.
This always sounds like a good idea when you discuss it. Basically it is the back-out provision, if things are going badly, you can get out before it gets worse. While this may be appropriate in some cases, in many cases it ends up destroying the entire reason for the contract.
The point of most contracts is to set a series of provisions out defining what each party is responsible for. Most of the value comes from the fact that both parties know they are tied to each other for a certain amount of time as long as both parties live up to their end. If you provide a get out of jail free card, with one of these provisions, then you do not have a 1, 2 or 3 year contract, all you really have is a self renewing 60 day contract.
There is nothing wrong with 60 day self renewing contracts, if that is what both parties want, but more often then not, when these provisions are used it is not the case.
Always be sure that what you contract for is what you intend. As my father always said to me “Say what you mean, and mean what you say.”
While the rent per square foot is an important consideration, money is not the only thing that can be negotiated in a commercial lease.
A colleague of mine, Attorney Chris Moander, recently wrote an article “The lease is a beast I can’t stand in the least” on his blog, and he warns of the danger of being on the hook for maintenance of a building that you thought you were just leasing.
This brought me to another topic that needs discussion, and that is negotiating the commercial lease. Read more
Always a question that concerns business owners is what should be included in a contract? The short answer: everything that is needed. However, there are ways to break up drafting a contract to make it easier to know what should be included, and when it is too much and jeopardizes the deal getting done.
Even though there are many different parts of a contract and some of them can be quite long, there is a way to think about contract drafting as a three part system. I call them “Information”, “Action”, and “Insurance”: