ENFORCEMENT OF AUTOMATIC RENEWAL CLAUSES IN CONNECTICUT CONTRACTS
Many individuals are not aware that in Connecticut there are various laws designed to protect a consumer from the enforcement of certain contract terms. One situation where a consumer may face a risk from the enforcement of unreasonable contract terms is regarding automatic contract renewals.
Often a consumer will agree to a contract for a service for a set fee for a set period of time, such as paying monthly for a one year period. Such a contract frequently states that after the initial one year term, the contract automatically renews for another year. The consumer forgets about the automatic renewal, and then during the second year is no longer using the service and attempts to cancel the contract. The business then states that the contract auto-renewed and the consumer owes for the whole second year. Is this enforceable?
Conn. Gen Stat. § 42-126b provides that a seller under a written contract for consumer products or services with an initial term of more than 180 days, with a provision for an automatic renewal for a period of greater than 31 days, must provide the consumer with a “clear and conspicuous” notice containing the procedure for cancellation and the right not to renew, which notice must be given no more than 60 and no less than 14 days before the renewal. If the original contract is for less than 180 days, and the automatic renewal period is greater than 31 days, the written contract must contain a “clear and conspicuous” notice of the right to non-renewal, which must be exercised no more than sixty days prior to renewal. The failure of the business to provide the required notice for an agreement of over 180 days, or to include the language in the contract for an agreement of less than 180 days, makes any goods or services after the renewal date an unconditional gift, which would prevent the business from collecting from the consumer for nonpayment.
Connecticut has a separate provision in regard to health club contracts, contained in Conn. Gen. Stat. § 21a-219, which provides that a health club agreement may not contain an automatic renewal period of more than one month, and must provide the consumer the right to cancel on one month’s notice. This provision, in effect, makes all health club contract auto-renewals a month-to-month contract. Health clubs also cannot require a consumer to sign an initial agreement of more than one year. Clubs are allowed to offer an initial term of up to two years, but must also offer the option of an initial term of no more than one year.
For business to business contracts, Connecticut also has a provision applicable to auto-renewal of refuse collection agreements. This provision, found in Conn. Gen. Stat. § 42-158aa provides that any auto-renewal provision, other than a provision renewing the contract for one month at a time which can be cancelled without penalty, is not enforceable unless the original contract contains a specific clause in twelve point font or larger, initialed by the purchaser, in which the purchaser acknowledges the terms of the auto-renewal provision.
If you are in a situation where a business is trying to collect under an auto-renewed contract, review these Connecticut laws to see if the business has followed the law and if you have the right to cancel the agreement