Cecily Zamora
Wisconsin's Auto-Renewal Law outlines specific requirements for contracts with automatic renewal clauses to be valid and enforceable. This law applies to businesses in Wisconsin, which must notify customers of automatic renewal provisions in their business contracts. The law does not apply to certain contract categories, such as those with a termination notice period of one month or less and contracts involving government entities. To be enforceable, automatic renewal clauses must include specific disclosures, and sellers must provide advance notice of each renewal, using a prescribed format. If the seller fails to comply with these requirements, customers may terminate the contract at the end of the term and may be entitled to recover damages and legal fees. Understanding and complying with Wisconsin's Auto-Renewal Law is crucial for businesses to ensure their contracts are legal and to avoid potential disputes with customers.
| Characteristics | Values |
|---|---|
| Scope of the law | Business contracts |
| Contracts exempt from the law | Contracts where a customer may terminate the agreement upon notice of one month or less; contracts with any federal, state, or local government entity; leases of medical equipment; a contract for the purchase or lease of real property; contracts for equipment or services that are for personal, family, or household purposes; certain telecommunications contracts; a contract between a cooperative association and a member; a contract for the lease, maintenance, repair, service, or inspection of elevator or escalator systems; a contract for the supply of industrial, medical, or other gases |
| Requirements for a valid auto-renewal clause | The contract must make certain disclosures which the customer must either sign or initial in acknowledgment; the seller may be required to provide notice to the customer in advance of each auto-renewal, and the notice must contain certain specified information |
| Notice requirements | Notice must be provided at least 15 days but not more than 60 days before the deadline for the customer to decline renewal or extension; notice can be provided by mail, email, personal delivery, fax, or courier service |
| Consequences of non-compliance | The automatic renewal provision is not enforceable and the contract will terminate at the end of its current term; the customer may be able to recover damages, including twice the amount of the periodic payment specified in the contract up to $1,000, and attorney fees |
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What You'll Learn
Customers can terminate contracts with non-compliant sellers
Wisconsin's Auto-Renewal Law allows customers to terminate contracts with sellers who do not comply with the law's requirements. This law applies to contracts for the lease or purchase of certain business equipment or services, where the automatic renewal provision may come into effect without the customer's explicit consent.
To be valid and enforceable, an automatic renewal clause in a contract must meet three primary requirements. Firstly, the contract must include specific disclosures that the customer must sign or initial to acknowledge. Secondly, the seller must provide advance notice of each automatic renewal, containing certain specified information. This notice can be provided via regular mail, email, personal delivery, fax, or courier service. Lastly, the contract must allow the customer to terminate the contract by giving the seller notice, typically within a month or less.
If a seller fails to comply with these requirements, the automatic renewal provision becomes unenforceable, and the contract will terminate at the end of its current term. Customers can leverage this non-compliance to their advantage and terminate the contract despite any renewal provisions. Additionally, customers may be entitled to recover double damages and attorney fees if the seller refuses to terminate the contract despite their non-compliance with the law.
It is important to note that the Auto-Renewal Law does not apply to all contracts. Excluded contracts include those with a termination clause of one month or less, contracts with government entities, leases of medical equipment, real estate contracts, and certain telecommunications contracts.
To summarize, customers in Wisconsin have the right to terminate contracts with non-compliant sellers under the state's Auto-Renewal Law. By understanding their rights and the requirements of the law, customers can protect themselves from unwanted automatic renewals and take legal action if necessary.
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Contracts that are exempt from the law
Wisconsin's Auto-Renewal Law, which came into effect on May 1, 2011, applies to two categories of commercial contracts: contracts for the lease of business equipment used primarily in Wisconsin, and contracts for providing business services. However, there are certain contracts that are exempt from this law.
Firstly, contracts where a customer may terminate the agreement upon notice of one month or less are exempt. This includes contracts that allow a customer to terminate an automatically renewed or extended contract by giving the seller notice, but only if the contract does not require the customer to give notice more than one month in advance.
Secondly, contracts with any federal, state, or local government entity are exempt from the law. This includes contracts to which a federal, state, or local government is a party, as well as contracts between a cooperative association organized under Ch. 185 and a member of the cooperative.
Thirdly, leases of medical equipment are exempt. This includes contracts for the lease or purchase of access service, as defined in s. 196.01 (1b).
Finally, contracts for the purchase or lease of real property are exempt from the Auto-Renewal Law. This includes contracts for the lease or purchase of telecommunications services, including commercial mobile services, if certain conditions are met. For example, if the contract is derived from a tariff issued by a telecommunications provider or if the contract permits the lessee or purchaser to terminate the contract after an automatic renewal by giving written notice, allowing termination to take effect not more than one month after receipt of the written notice.
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Requirements for valid auto-renewal clauses
Wisconsin's Auto-Renewal Law applies to two categories of commercial contracts: contracts for the lease of business equipment used primarily in Wisconsin, and contracts for providing business services. The law does not apply to certain specified categories of contracts, including contracts where a customer may terminate the agreement upon notice of one month or less, contracts with any federal, state, or local government entity, leases of medical equipment, contracts for the purchase or lease of real property, contracts for equipment or services for personal, family, or household purposes, and certain telecommunications contracts.
For an automatic renewal clause in a covered contract to be valid and enforceable, the Auto-Renewal Law has three primary requirements:
- Disclosure: The contract must make certain disclosures that the customer must either sign or initial in acknowledgment. The required disclosures include a statement that the contract will be automatically renewed unless the customer declines, the length of the renewal term, information on whether charges will increase during the renewal term, a description of the actions the customer must take to decline the renewal, and the deadline for the customer to decline the renewal. If the contract will automatically renew for more than one month unless the customer specifically declines, the seller must obtain the customer's signature on a separate form with the required disclosures or include the disclosures in a conspicuous manner in the contract itself, with the customer initialing the page with the disclosure.
- Notice: In addition to the disclosure requirements, if a covered contract has an initial term of more than one year and provides for automatic renewal for an additional period of more than one year, the seller must provide written notice to the customer of the renewal at least 15 days but no more than 60 days before the deadline for the customer to decline the renewal. This notice must include the same information as the disclosure, and it may be delivered in one of six methods depending on the contract. If the notice is provided on a monthly invoice, it must be prominently displayed in bold text and at least size 12 font.
- Enforcement: If the seller does not provide timely notice with the required disclosures, the automatic renewal provision is not enforceable, and the contract will terminate at the end of its current term. If a seller refuses to terminate a contract after failing to comply with the notice requirements, a customer may be able to recover double damages and attorney's fees.
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Seller's notice requirements
Wisconsin's Automatic Renewal Law applies to two categories of commercial contracts: (i) contracts for the lease of business equipment used primarily in Wisconsin, and (ii) contracts for providing business services. However, the law does not apply to certain types of contracts, including those where a customer may terminate the agreement upon notice of one month or less, contracts with any government entity, leases of medical equipment, contracts for the purchase or lease of real property, contracts for equipment or services for personal, family, or household purposes, and certain telecommunications contracts.
For an automatic renewal clause in a covered contract to be valid and enforceable, the Auto-Renewal Law outlines specific requirements that sellers must adhere to. Firstly, the contract must include certain disclosures that the customer must either sign or initial in acknowledgment. These disclosures should be presented in a separate form or included conspicuously in the contract itself. The required disclosures encompass the following:
- A statement that the contract will be renewed or extended unless the customer declines.
- The length of the renewal term.
- Information on whether there will be an increase in charges during the renewal term.
- A description of the actions the customer must take to decline the renewal.
- The deadline for the customer to decline the renewal.
In addition to these initial disclosure requirements, sellers may also be mandated to provide subsequent notices. If a contract has an initial term of more than one year and provides for automatic renewal or extension for an additional term of more than one year, sellers must notify customers at least 15 days but not more than 60 days before the renewal or extension. This notice should include similar elements as the initial disclosure.
The manner in which the notice is provided is also specified by the Automatic Renewal Law. Sellers may provide notice through various methods, including mailing, including it on a monthly invoice, email, personal delivery, fax, or courier service. If provided on a monthly invoice, the notice must be prominently displayed in bold text and a font size of at least 12 points.
If a seller fails to comply with the notice requirements, the automatic renewal provision becomes unenforceable, and the contract will terminate at the end of its current term. Customers may also be entitled to recover double damages and attorney's fees in such cases.
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Customers' rights to recover damages
Wisconsin's Automatic Renewal Law provides customers with certain rights and remedies in the event of a dispute with a seller over a contract with an automatic renewal clause. The law outlines specific requirements for sellers to comply with when including automatic renewal provisions in their contracts, and customers may be able to recover damages if these requirements are not met.
Firstly, customers may recover damages if the seller refuses to terminate a covered contract after the customer properly declined renewal, and both the initial term and the renewal term of the contract are greater than one year. In this case, the automatic renewal provision is deemed unenforceable, and the customer may be entitled to twice the amount of the periodic payment specified in the contract, up to $1,000, or twice the damages incurred.
Secondly, customers may also recover damages if the seller refuses to terminate the contract after failing to provide a required notice, and both the initial term and renewal term are greater than one year. Proper notice typically involves sending a statement to the customer, at least 15 days but not more than 60 days before the renewal, stating that the contract will be renewed unless the customer declines, along with other specified information. If the seller fails to provide this notice, customers have significant leverage to recover double damages and attorney fees.
It is important to note that double damages and attorney fees may not be available if the contract has an initial or renewal term of one year or less. In these cases, the customer may only treat the contract as terminated and may not be able to recover statutory damages and attorney fees if the seller agrees to terminate upon receiving notice of the customer's decline to renew.
To ensure compliance with the law, sellers should establish procedures and use form documents that meet the disclosure requirements, such as including the required disclosure in conspicuous font on a page initialed by the customer or requiring a separate acknowledgement to be signed. By doing so, sellers can also limit their liability for damages if they inadvertently violate the Auto-Renewal Law.
Overall, Wisconsin's Automatic Renewal Law empowers customers to protect themselves from unwanted automatic renewals and provides a framework for seeking compensation if their rights are violated.
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Frequently asked questions
Wisconsin's Automatic Renewal Law states that businesses must notify customers of automatic renewal provisions in business contracts. The law outlines specific requirements for contracts to be valid and enforceable.
There are three primary requirements for an automatic renewal clause to be valid and enforceable in Wisconsin: First, the contract must include specific disclosures that the customer must sign or initial. Second, the seller must provide advance notice of each automatic renewal, containing certain specified information. Third, the manner in which the notice is provided must comply with the law's requirements.
Yes, customers may be able to terminate a contract with an automatic renewal clause at the end of the term if the seller fails to comply with the requirements of the Auto-Renewal Law. The customer should determine if their contract is subject to the law and if the seller has met the disclosure and notice requirements.
If a seller refuses to terminate a contract despite not meeting the disclosure and notice requirements, the customer may have legal recourse. The customer may be entitled to recover double damages and attorney's fees, as outlined in Wisconsin's Auto-Renewal Law.
Yes, the law does not apply to certain types of contracts, including contracts with a termination clause of one month or less, contracts with government entities, leases of medical equipment, real estate contracts, and specific telecommunications contracts.
