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Example two: automatic rollover
A small business enters into a 12 month contract with an advertising company to manage its promotional activities. Despite the 12 month term of the contract, a term in the contract has the effect of automatically renewing the contract for a further 12 months unless the small business gives written notice that it does not wish to renew the contract at least six months before the initial term expires. Under the contract, the small business must pay a large fee if it wishes to terminate the contract early.
This term is likely to raise concerns as it allows the advertising company to automatically renew the contract without the small business’ express consent. |
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