Farms, like most businesses, enter into all sorts of agreements. Some contracts can be terminated at any time; others are for a specified period. For instance, your farm may lease a copy machine, computers or milking equipment; it may have a garbage disposal agreement and likely has agreements in place concerning the purchase of fuel, propane or other consumables. But how closely do you review the “fine print” of those agreements?

Many contracts contain “auto-renewal” provisions, which state that if the customer doesn’t give proper notice, the agreement will renew for a subsequent term. For instance, hoof bath subscription services are becoming increasingly popular. Under these agreements, the farm pays a flat monthly fee (usually based on the dairy herd head count) in exchange for getting all the supplies it needs for that month to run its baths. The subscription term is usually for 12 months and cannot be terminated at will. The agreement says that if you do not give at least 90 days advance notice that you do not want to continue, the subscription will automatically renew for another 12 months.

Under the above scenario, the question becomes: Are you stuck with another year’s subscription of hoof bath supplies you don’t want if proper notice wasn’t given? The good news is that you might not be.

Auto-Renewal Law

Wisconsin, like some other states, has a statute called the Auto-Renewal Law, which makes contracts that automatically renew unenforceable unless certain conditions are met. This statute applies to certain business contracts for the lease of business equipment and contracts for providing business services.

The Auto-Renewal Law states that for an auto-renewing contract to be binding, the vendor must adhere to two key rules:

Required notice

If the agreement at issue does not contain the requisite notice, or if the vendor fails to issue the subsequent warning, then the Auto-Renewal Law states that the auto-renewal provisions of the agreement cannot be subsequently enforced, and the agreement expires at the end of the initial term.

Further, vendors who violate the statute and who continue to try to enforce an auto-renewing agreement can be held liable for exemplary damages of up to $1,000, plus be required to pay the customer’s attorney’s fees incurred in having to enforce its rights.

In summary, if you feel trapped in a service agreement or lease agreement, all is not lost. Careful attention should be given to whether the vendor strictly complied with the Auto-Renewal Law, because if they didn’t, you may very well be free and clear of the contract.