By: Thomas S. Tripodianos Published: June 2014

Automatic Renewal Provisions

Question.        My landscape contractor has included an automatic renewal provision in his contract is this allowable?

Answer. Yes, but there are limits. 

The Landscaper agreed to provide Home Owner with lawn maintenance services. The agreement initially for a single season commencing April 1, includes a provision that thereafter, the agreement shall be automatically renewed for additional seasons unless either party by written notice notifies the other at least ninety days before the end of any twelve month renewal period that it intends to terminate the services and such notification shall be effective one hundred and eighty (180) days thereafter.

Home Owner paid for the initial season. Landscaper did not provide Home Owner with any written notice that the agreement would not be automatically renewed for another 12 month term, nor did Home Owner notify Landscaper in writing that he did not intend to renew the agreement at that time.

When the next season came along Landscaper started providing services but Home Owner failed to make payment.

Although neither party provided written notice regarding the renewal or non-renewal of the agreement after the initial term ended, each side takes the position that it was under no obligation to do so. Home Owner relies on the requirements in General Obligations Law § 5-903 and Landscaper relies on the automatic renewal provision of the agreement. The only written notice regarding the agreement was made by Home Owner in April of season two, at which time he notified Landscaper that he was terminating the agreement effective September of the prior year, "consistent with my verbal termination of the agreement in September." Landscaper maintains that Home Owner never terminated the agreement, which automatically renewed and that Home Owner owes him for season two services.

The parties' dispute centers on whether the agreement is a contract for "service . . . to or for . . . personal property" under General Obligations Law § 5-903(2), which would render its automatic renewal provision (evergreen clause) unenforceable unless Landscaper provided timely prior written notice calling Home Owner's attention to it. If § 5-903(2) does not apply to the parties' agreement then Home Owner had the affirmative obligation to cancel before the automatic renewal period.

In its entirety, General Obligations Law § 5-903(2) provides that:

"No provision of a contract for service, maintenance or repair to or for any real or personal property which states that the term of the contract shall be deemed renewed for a specified additional period unless the person receiving the service, maintenance or repair gives notice to the person furnishing such contract service, maintenance or repair of his intention to terminate the contract at the expiration of such term, shall be enforceable against the person receiving the service, maintenance or repair, unless the person furnishing the service, maintenance or repair, at least fifteen days and not more than thirty days previous to the time specified for serving such notice upon him, shall give to the person receiving the service, maintenance or repair written notice, served personally or by certified mail, calling the attention of that person to the existence of such provision in the contract."

The parties' agreement was "for service . . . to or for . . . real property" within the meaning of the General Obligations Law. The services provided were directly and inextricably related to the home.

Since the renewal clause was not timely brought to Home Owner's attention, the agreement did not automatically renew.  Home Owner had the right to cancel the agreement at any time thereafter but is obligated to pay for services rendered.

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