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Hi All:

I highly appreciate help and advice in this collections matter. We bought a store that has NuCO2 equipment already installed. We signed a 1 year lease agreement with them while we make alternate arrangements (lease attached). Beginning about 3 months before lease expired we started notifying them that we want to terminate the contract. However, at the end of 1 year period they took the equipment away and sent us an invoice for $4100+. They did not send any break down of these charges. Normally the charge was around $150 ($75 for rental and rest for CO2 refill). 

Upon inquiry, the NuCO2 Resolution manager, pointed out the following terms from the contract:
"Unless one of the parties has notified the other party of its intention not to renew this agreement at least twelve (12) months prior to the expiration of the Initial Term or any Renewal Period,as the case may be, this Agreement shall automatically renew for successive six (6) year periods (each, a "Renewal Period")."

I did ask them, how could I notify my intention 12 months prior if the contract is for twelve months. Her response was "Normally  they send in their non renewal right away."  However, that is technically not 12 months prior. 

They have sent this to Collections agency now. Kindly advice how to proceed. 

P.S. NuCO2 is based in Florida and I am in Arkansas.



 

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However, at the end of 1 year period they took the equipment away and sent us an invoice for $4100+.


They're charging you... (more)

FattenUpMyWallet (Jul. 24, 2016 @ 4:06p) |

Under the terms of the contract as signed, they're entitled to six years of rental if it's not canceled in time. I am n... (more)

IMBoring25 (Jul. 24, 2016 @ 5:05p) |

These folks are apparently not what you would want to deal with anyhow, OP.           

See:      http://www.bbb.org/south-e... (more)

Mickie3 (Jul. 25, 2016 @ 8:35a) |

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It doesn't specify how you are to notify them of not wanting to renew.  I'm sure before signing this agreement you were clear you only wanted it for one year, thus the handwritten change from a 6-year to 1-year lease.  So you did give them notice over 12 months in advance.  And it'd be hard to convince anyone otherwise, since if you wanted a seven year lease you would've altered the contract to read seven years, not one year.  

wow that's a bad contract. It was 'changed to 1 year' but the rest of the terms weren't.

Did they explain how they came up with 4100? I would hammer them on Yelp and google places and of course dispute the charge.

I agree with Glitch99. Hand this to your attorney. You shouldn't have waited until it went to collections.

1-yr. termination notice was for a 6-yr contract. But your contract was for 1 yr. not 6 yrs. If total duration changes, then both termination & automatic-renewal duration must change, too.

1-yr termination notice on a 6-yr contract = about 17% of contract duration remaining. That means, on a 1-yr contract, you must terminate at least 2 months before contract ends.

If you fail to terminate a 6-yr contract on time, the contract renews for 6 yrs. (the same duration originally agreed to). So, if you fail to terminate a 1-yr contract on time, contract should automatically renew for 1 yr.

Of course, automatic renewal is a non-issue, since you terminated contract 3 months before it was to expire.

cijup said:   1-yr. termination notice was for a 6-yr contract. But your contract was for 1 yr. not 6 yrs. If total duration changes, then both termination & automatic-renewal duration must change, too.

1-yr termination notice on a 6-yr contract = about 17% of contract duration remaining. That means, on a 1-yr contract, you must terminate at least 2 months before contract ends.

If you fail to terminate a 6-yr contract on time, the contract renews for 6 yrs. (the same duration originally agreed to). So, if you fail to terminate a 1-yr contract on time, contract should automatically renew for 1 yr.

Of course, automatic renewal is a non-issue, since you terminated contract 3 months before it was to expire.

  That would make sense, but is something to have argued before signing the contract.  At this point it's just making up terms that don't exist.

If I were you, I would go back and read your other contracts to make sure you don't get into this situation with any other vendors.

BostonOne said:   If I were you, I would go back and read your other contracts to make sure you don't get into this situation with any other vendors.

Read a contract? Ha! Nobody does that anymore!

Glitch99 said:   
That would make sense, but is something to have argued before signing the contract.  At this point it's just making up terms that don't exist.

  They have to exist, if only implicitly, for contract to make sense.  How could he give 12 months termination notice on a 12-month contract? Should we expect him to give 72 months notice on a 72-month contract?

These automatic renewal clauses are also known as "evergreen clauses." https://www.google.com/webhp?q=automatic%20renewal%20clause%20la...

Several states have imposed restrictions on their use. For example, in some states, the contract language must be in all caps. In other states, the business would have to send you a notice of renewal.

Is Florida one of those states that have enacted a law regulating evergreen clauses? Arkansas? What about the state specified in the contract's choice of law section (if there is one)? You could start researching this yourself, or you could consult with an attorney.

Disclaimer: I am not your attorney.

deleted

cijup said:   
Glitch99 said:   
That would make sense, but is something to have argued before signing the contract.  At this point it's just making up terms that don't exist.

  They have to exist, if only implicitly, for contract to make sense.  How could he give 12 months termination notice on a 12-month contract? Should we expect him to give 72 months notice on a 72-month contract?

  That the contract doesn't make sense doesn't change the fact the timeframes are what they are.  But changing the initial term to one year - and it was clearly changed to one year for this customer, with the handwritten edit - strongly indictates the agreement included effective notice about not renewing the contract, he only wanted one year period.  And with no requirement for the method of giving notice, it's an argument virtually impossible to disprove.  I don't see a claim that could be made that would get around that defense.

If he argues all the numbers should've been adjusted to give him time to terminate, they're going to say they made the changes requested and if he wanted more he should've made those changes as well.

The contract says if you don't tell them your intention to cancel within 12 months then it will renew for another 6 years. I assume the 4100 is somehow calculated for 6 years or usage. Call them back and tell them you did notify them when you signed the contract that you wanted to cancel within 12 months.

Glitch99 said:   
cijup said:   
Glitch99 said:   
That would make sense, but is something to have argued before signing the contract.  At this point it's just making up terms that don't exist.

  They have to exist, if only implicitly, for contract to make sense.  How could he give 12 months termination notice on a 12-month contract? Should we expect him to give 72 months notice on a 72-month contract?

  That the contract doesn't make sense doesn't change the fact the timeframes are what they are.  But changing the initial term to one year - and it was clearly changed to one year for this customer, with the handwritten edit - strongly indictates the agreement included effective notice about not renewing the contract, he only wanted one year period.  And with no requirement for the method of giving notice, it's an argument virtually impossible to disprove.  I don't see a claim that could be made that would get around that defense.

If he argues all the numbers should've been adjusted to give him time to terminate, they're going to say they made the changes requested and if he wanted more he should've made those changes as well.

  they could argue a similar point under your theory.  you're saying that the change from six years to one year indicated effective notice of a desire for a one-year, non-renewing deal.  But they will say that, if that were the case, he would've (1) crossed out the automatic-renewal clause OR (2) Added a termination-notice addendum to the contract OR (3) Sent a termination notice by email on the day he signed the contract.

EDIT: If OP were devious, he could say he snail mailed a termination notice on the day he signed the contract.  (After all, contract is, as you pointed out, silent on method of termination).  I thought of that idea earlier.  But I wasn't sure (and am still not sure) that a court would find his claim credible, since he could easily fabricate a document.  Would a court generally demand a postmarked envelope?

HKnight said:   These automatic renewal clauses are also known as "evergreen clauses." https://www.google.com/webhp?q=automatic%20renewal%20clause%20law 

Several states have imposed restrictions on their use. For example, in some states, the contract language must be in all caps. In other states, the business would have to send you a notice of renewal.

Is Florida one of those states that have enacted a law regulating evergreen clauses? Arkansas? What about the state specified in the contract's choice of law section (if there is one)? You could start researching this yourself, or you could consult with an attorney.

Disclaimer: I am not your attorney.

  This is a great point.  Perhaps company strategically picked collections over litigation, knowing the clause is illegal/improper and therefore useless in court.  

cijup said:   
EDIT: If OP were devious, he could say he snail mailed a termination notice on the day he signed the contract.  (After all, contract is, as you pointed out, silent on method of termination).  I thought of that idea earlier.  But I wasn't sure (and am still not sure) that a court would find his claim credible, since he could easily fabricate a document.  Would a court generally demand a postmarked envelope?

I'm certain that when changing the initial term to one year, OP actually did say something, even just casually, that could be construed to mean he wouldn't be renewing. As we agree, the terms as-is simply do not make sense and only support that position, and it cannot be disproven.
  

Glitch99 said:   
cijup said:   
Glitch99 said:   
That would make sense, but is something to have argued before signing the contract.  At this point it's just making up terms that don't exist.

  They have to exist, if only implicitly, for contract to make sense.  How could he give 12 months termination notice on a 12-month contract? Should we expect him to give 72 months notice on a 72-month contract?

  That the contract doesn't make sense doesn't change the fact the timeframes are what they are.  But changing the initial term to one year - and it was clearly changed to one year for this customer, with the handwritten edit - strongly indictates the agreement included effective notice about not renewing the contract, he only wanted one year period.  And with no requirement for the method of giving notice, it's an argument virtually impossible to disprove.  I don't see a claim that could be made that would get around that defense.

If he argues all the numbers should've been adjusted to give him time to terminate, they're going to say they made the changes requested and if he wanted more he should've made those changes as well.

  It makes perfect sense. By its own terms, the contract's initial term is for a year. Unless OP cancels with one-year notice, the contract will renew six times for one-year periods. That would make it really difficult to prevent it from renewing once (i.e., would need to cancel at the time the contract is signed), but simple to prevent it from renewing a second time. So, this contract can last for up to 7 years by its own term (the Initial Term and six Renewal Periods). The handwritten change prevents the contract from being a twelve-year contract (a six-year Initial Term with six Renewal Periods).

HKnight said:   
Glitch99 said:   
cijup said:   
Glitch99 said:   
That would make sense, but is something to have argued before signing the contract.  At this point it's just making up terms that don't exist.

  They have to exist, if only implicitly, for contract to make sense.  How could he give 12 months termination notice on a 12-month contract? Should we expect him to give 72 months notice on a 72-month contract?

  That the contract doesn't make sense doesn't change the fact the timeframes are what they are.  But changing the initial term to one year - and it was clearly changed to one year for this customer, with the handwritten edit - strongly indictates the agreement included effective notice about not renewing the contract, he only wanted one year period.  And with no requirement for the method of giving notice, it's an argument virtually impossible to disprove.  I don't see a claim that could be made that would get around that defense.

If he argues all the numbers should've been adjusted to give him time to terminate, they're going to say they made the changes requested and if he wanted more he should've made those changes as well.

  It makes perfect sense. By its own terms, the contract's initial term is for a year. Unless OP cancels with one-year notice, the contract will renew six times for one-year periods. That would make it really difficult to prevent it from renewing once (i.e., would need to cancel at the time the contract is signed), but simple to prevent it from renewing a second time. So, this contract can last for up to 7 years by its own term (the Initial Term and six Renewal Periods). The handwritten change prevents the contract from being a twelve-year contract (a six-year Initial Term with six Renewal Periods).

  Where do you get 6 renewal periods?  It renews for a new 6-year term, and continues to do so every 6 years indefinitely.  By changing the initial term from 6 years to 1 year, it committed him to 7 year term unless he gave notice of his intent to not renew before even signing the contract.

Exactly. So by giving his intent to only have a one year contract, he gave his intent to not extend the contract.

CD47 would know better, but I'm pretty sure the 1 year termination requirement isn't even valid if the contract was reduced to 1 year instead of six in the first place.

Also, OP, it says "later of effective date or date equipment is installed". Effective date on the top appears blank (or did you blank it out)? Was the contract by any chance signed after the install date? If so (and no "effective date" is listed), then realistically (according to the wording) you CAN'T give 1 year notice even if the period was legit... I'd do the Yelp reviews CN47 suggested and also suggest the Collection agency take you to court.

mwarrior said:   Exactly. So by giving his intent to only have a one year contract, he gave his intent to not extend the contract.

CD47 would know better, but I'm pretty sure the 1 year termination requirement isn't even valid if the contract was reduced to 1 year instead of six in the first place.

Also, OP, it says "later of effective date or date equipment is installed". Effective date on the top appears blank (or did you blank it out)? Was the contract by any chance signed after the install date? If so (and no "effective date" is listed), then realistically (according to the wording) you CAN'T give 1 year notice even if the period was legit... I'd do the Yelp reviews CN47 suggested and also suggest the Collection agency take you to court.

  It's not clear whether he was against any kind of auto renewal, since he stupidly failed to have that part of the contract modified.  Perhaps he was ok with a 12-month auto renewal, but not ok with a 72-month auto renewal.  

Whatever the case, my perspective is that the modified contract should be equiv. to the unmodified contract.  A 72-month contract auto renews for 72-months.  So a 12-month contract should auto renew for 12 months.

A 72-month contract requires termination notice at least 12 months before contract expires.  So a 12-month contract should require termination notice at least 2 months before contract expires.

Seems logical to me, but apparently not to anybody else. 

(That said, OP may have been on a very similar wavelength, since he gave notice 3 months before his 12-month contract was to expire).

 

cijup said:   
mwarrior said:   Exactly. So by giving his intent to only have a one year contract, he gave his intent to not extend the contract.

CD47 would know better, but I'm pretty sure the 1 year termination requirement isn't even valid if the contract was reduced to 1 year instead of six in the first place.

Also, OP, it says "later of effective date or date equipment is installed". Effective date on the top appears blank (or did you blank it out)? Was the contract by any chance signed after the install date? If so (and no "effective date" is listed), then realistically (according to the wording) you CAN'T give 1 year notice even if the period was legit... I'd do the Yelp reviews CN47 suggested and also suggest the Collection agency take you to court.

  It's not clear whether he was against any kind of auto renewal, since he stupidly failed to have that part of the contract modified.  Perhaps he was ok with a 12-month auto renewal, but not ok with a 72-month auto renewal.  

Whatever the case, my perspective is that the modified contract should be equiv. to the unmodified contract.  A 72-month contract auto renews for 72-months.  So a 12-month contract should auto renew for 12 months.

A 72-month contract requires termination notice at least 12 months before contract expires.  So a 12-month contract should require termination notice at least 2 months before contract expires.

Seems logical to me, but apparently not to anybody else. 

(That said, OP may have been on a very similar wavelength, since he gave notice 3 months before his 12-month contract was to expire).

 

  I agree completely.  I just think it's a much cleaner to argue that notice was given when signing the contract, than to ask the collection agency (or judge) to create new terms to enforce.  Especially the collection agency, who are going to just follow the contract as provided to them.

Besides, my argument leaves room for using yours as a fallback...
 

Glitch99 said:   

I agree completely.  I just think it's a much cleaner to argue that notice was given when signing the contract, than to ask the collection agency (or judge) to create new terms to enforce.  Especially the collection agency, who are going to just follow the contract as provided to them.Besides, my argument leaves room for using yours as a fallback...


  I'm pretty sure you'll need my argument as backup, since OP failed to cross out "if you don't give 12 months notice, this contract auto-renews for 6 yrs." 

He better do what the other guy said: Research state law regarding evergreen clauses. 

If this is a business collection and doesn't affect your personal credit, why not just refuse to pay and let them sue you for it? You can explain it to the judge then. Businesses have disputes all the time, and aren't beholden to credit scoring like individuals.

Quite a contract for an industry that will see over half their customers fail before the initial contract period is half over. Not requiring written notice seems like quite a loophole, too.

If OP gave verbal notice upon signing, he'd in theory be covered, but he somewhat undermined that argument by then giving written notice unless it was framed as making arrangements for pickup of the equipment commensurate with the previously-agreed-upon cancellation.

However, at the end of 1 year period they took the equipment away and sent us an invoice for $4100+.


They're charging you for a service they didn't provide. It doesn't matter if it is an automatic renewal because they didn't keep up their end of the contract.

Under the terms of the contract as signed, they're entitled to six years of rental if it's not canceled in time. I am not a lawyer, but if they retrieved the equipment without telling you the automatic renewal had been triggered, I would say at that point they were not operating in good faith, which is what should open you up to re-negotiate the terms.

A business operating in good faith would have at least informed you at the time you requested non-renewal that the contract had been auto-renewed and asked how you wanted to proceed.

An ethical business would have said they know they have you over a barrel but, since they're not going to have to involve the Sheriff to get their equipment back, they'd only charge you for loss of rental for the time the equipment is actually out of service and the relocation. That's probably a lot more complicated now that it's gone to collections.

These folks are apparently not what you would want to deal with anyhow, OP.           

See:      http://www.bbb.org/south-east-florida/business-reviews/food-prod...



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