Evergreen clauses in contracts tie you down for longer than you might have wanted. They’re subtle, buried in other clauses and often written in technical – some would say deliberately too technical – language.
I’ve dealt with scores of frustrated customers over the years who have found themselves unexpectedly shackled to contracts for years longer than they wanted to be. The key is always spotting these clauses before signing on the dotted line.
But identifying evergreen clauses in contracts can be difficult. Identifying them in complicated office equipment contracts can be virtually impossible to the untrained eye.
When is a 12-month contract not a 12-month contract?
An evergreen clause typically triggers an automatic renewal of a contract at the end of its original term. Let’s say you signed a contract with an office equipment supplier for five photocopier machines. You pay a monthly or quarterly charge and the contract runs for 12 months.
An evergreen clause will dictate that either you or the supplier must give notice before the end of that 12 months if you want to terminate the agreement. That could typically be 90 or 120 days – I’ve even seen contracts stipulating 12 months’ notice of termination on a one-year deal!
If neither of you does that, it automatically ties you in for another 12 months. You can’t stop that cycle because you’ve signed the contract. Imagine if that was a two-year contract. Or even a five-year one!
Busy business owners either forget to trigger the required release or they naturally assume that a 12-month contract is just that, 12 months. The horror scenario here is that you might also sign up with someone new, on the assumption that your original contract is ending and then you end up paying for the same service twice.
These contract traps are common
It’s all about stealing time, by trapping customers into paying more than they might want to. I’m helping a client at the moment who has signed a 12-month contract which he wasn’t even given the opportunity to properly look at. The small print stated that the company would write to him about renewal two months before the contract was due to expire. If he didn’t respond within five days of that email, the contract automatically renewed for another year.
What if that email had gone into his junk folder or he’d been away and missed it?
Even if he did spot it and opted not to renew, the company had already added on 16 weeks for search engine optimisation work which would have tied him in for an extra four months.
It also stated that the renewal date in future would become the anniversary of the date on which they’d sent him the email – two months before the contract should have ended. So they’ve stolen two months, because he signed up for a 12-month contract but has ended up with a 10-month one.
And if he’d tried to cancel at the end of the original year they would have stung him for the missing two months and the 16 weeks – all on top of the year he was now obliged to stay with them for, a total of an extra 18 months, none of which he asked for, or wanted!
Trapping business owners in contracts they can’t get escape from, for periods which they never asked for or wanted is a shameful practice. Businesses have been brought down by these clauses, and others hamstrung into operating at a loss until the contract is seen out.
You can avoid becoming a victim of an evergreen clause – contact us for a no-obligation contract review before you sign, or if you believe you may already be trapped in a contract you never wanted to renew, schedule a call with us today.