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"Ask Your Attorney" Column

About What An "Evergreen Clause" Is - And How They Are Used In Business Contracts

Dear Counselor: I was so busy getting my taxes done that I didn't get around to cancelling an expensive software contract that I pay monthly for. I called the company and told them my business no longer needed it, but they said I was stuck. They said there was an "evergreen clause" in my contract, and there was nothing I could do for a year. I thought an "evergreen" was a tree or a bush! What can I do?

Dear Client: An evergreen clause provides for the automatic renewal of a contract, and typically reads something like: "The term of this contract shall automatically renew for like periods unless either party gives the other written notice of termination at least 30 days prior to the end of the then current term." So what your software provider is arguing is that the term of their contract with you automatically renewed for another year since you did not give them notice of termination. They are saying you are stuck with that expensive payment, for a service you don't need! But wait -- there is a new Wisconsin law that might help you out of that deal. Wisconsin Statute 134.49 creates specific disclosure and renewal notice requirements which must be followed, or the "automatic" renewal clause might turn out to be unenforceable. The law protects businesses by requiring notice be given to them before renewal, and if no notice is given, renewal is void. And, the law also provides for damages to be assessed against someone who attempts to enforce a contract that violates the law. Our new law is effective now, so if you received no notice, it is the software company that might be stuck, not you! Check into it, and see whether you have a case. Good luck, and call me for further information. The law is technical, and only applies to business to business contracts.

Sincerely,
John L. Maier, Jr.
jmaier@wisclaw.com

Sweet & Maier, S.C., Attorneys
114 Church St. Elkhorn, Wisconsin
262-723-5480 www.wisclaw.com

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