Is an “automatic renewal” provision in a New York contract enforceable? Not always. Under New York law, the automatic renewal provision contained in a contract can be defeated by following a few simple steps. The party seeking to enforce renewal of the contract (we will call them “A”) must give written notice via certified mail to the other party (call them Party “B”). The written Notice must give “B” an opportunity to get out of the contract at the expiration of the initial Term. “A” must inform “B” of its right to provide written notice of “B’s” intent to get out of the contract. If “A” fails to provide the “warning” notice, then the “automatic renewal” cannot be enforced against “B”. If B rejects the renewal, then the “automatic renewal” also cannot be enforced against “B”.
Automatic renewal of a contract could have massive economic consequences, sometimes hundreds of thousands of dollars. Obviously, the terms of every contract must be reviewed by competent counsel for a thorough opinion on how to proceed. If you have questions or need help regarding an automatic renewal provision, contact Frier Levitt.
