. . . are there for the vendors best interests; they usually are not in yours. They’re also real common.

They typically state that if advance notice isn’t given within 30-60-90 days of the contract termination date, the contract auto renews. If it guarantees the price will stay the same with auto renewal, it might be ok. Many won’t. They’ll renew at the…then going market rates… So, the price isn’t locked in, but you are. Or, the contract price may reference other vendor terms and conditions, with the price changeable any time the latter does. The telecom industry is good for doing this.

Ways to get around these clauses:

  • At inception, strike out the wording in the contract and both sides initial and date the strike out.
  • The day the contract is signed, separately write out your notice not to renew and have both sides sign/date it. Provide a copy to each. Keep yours where you can find it, to provide proof, as you may later need the evidence.
  • If you are a few years into the contract, send the vendor a letter of notice of intent not to renew the contract…but get vendor acknowledgement of receipt. Examples, an email acknowledged or send by certified letter that the vendor has to sign for, with a return receipt.
  • Read the contract and identify the minimum notice required. Put on the calendar the last date advance notice is required by.

Vendors have moved to hefty penalty clauses for early termination. The penalty is probably 60-100% of the full remaining balance of the contract, due at termination. It protects the vendor’s revenue stream; it can be costly to you.

It goes without saying…keep all your vendor contracts in a readily accessible place, so you always know where they are. Keep the emails and certified mail return receipt with your contracts also.

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