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Are auto renew contracts legal???

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  • Are auto renew contracts legal???

    I manage a small custom software business in the State of Michigan and decided to switch ISP from a T1 line to a cable connection. My T1 contract was due to expire in August of 2005. When I let it expire the company contacted me and said it had renewed automatically for another full year and I now owed them over $8000.00 because I didn't supply them with a written disconnect notice 60 days before the contract expired.

    The agreement was signed for 12 months but I did find the auto renew clause in the fine print. I have been the GM of this company for about 5 months and the contract had been signed by my predecessor so I, of course didn't have any knowledge of this clause.

    My department manager, who had negotiated the contract, had been adamant that it was not an auto renewing contract and the salesman had not disclosed this to him. Of course there is no proof of that.

    The T1 provider did tell me that they did not have this clause in their contracts until last year which is why, in years past, they would contact our company and confirm that we wanted an extension. Even after all the explanations their rep agreed that she wasn't surprised at what happened but they still refused to work with me and are now threatening collections if I don't pay for the entire year.

    I guess my question is am I just out of luck because of management change, confusion and assumption based on previous business with this company or is there something I can do from a legal standpoint.

    Thanks for any help you can give.

  • #2
    Personally, I would let it go to collections, citing that you no longer use their service and that you had not signed the previous contract.

    The funny thing is, the collections group ARE willing (Usually) to take MUCH less.

    So why give them more then you really have to?
    If a worker is devoid of work, How then do they derive their value?