Contract law, to the untrained eye, can be a complicated sea of legalese. Fortunately, there are several basic elements that change very little from one contract to another. While consulting with a business lawyer is the best way to ensure a fair contract, familiarity with the basic parts of a contract can save you a lot of time (and frustration) both now and in the future.
The four elements of a legally-binding contract
For a contract to be legally binding (and thus have legal consequences), it must contain the following four elements; an offer that specifically details what will be provided, acceptance of that offer by the other party, consideration (money or other interest) exchanged between the parties, and capacity, intent and legality (in other words, the parties are of sound mental health, have not been coerced, and the contract does not aid or abet illegal activity).
Our legal system doesn’t allow for perpetual contracts, so every contract must include language that defines the duration, or term, of effect. Failure to include a term may make the contract unenforceable. However, if an individual (or business entity) knows how, that same contractual language can be used to make cancelling a contract nearly impossible.
The automatic renewal clause
Have you ever subscribed to a service or publication with your credit card and noticed that you’re still being billed three years later? If so, you’ve been the victim of an evergreen clause. It’s a contractual trick that’s extremely effective. Also known as a self-renewal clause, this exciting little chunk of text automatically renews a contract if notice of cancelation is not provided in a specific way during a specific timeframe
The best way to avoid automatic renewal clauses is to simply not sign a contract that includes one. However, it’s almost guaranteed to pop up in everyday business dealings, and it’s not completely avoidable. There are options to make it easier for you to terminate services after the contract term (i.e., a “sometime before” clause vs. a “sometime within”), but if you get “stuck” in what seems like a never-ending contract, you may want to seek legal counsel.
Don’t let a bad contract stop you or your business from moving forward. At Gertsburg Law, we solve problems; our attorneys know business because they own businesses. To schedule an appointment with our qualified Chagrin Falls and Cleveland business attorneys, call 440-571-7777 or contact us today.
