When you are running a business and you require the services of another company, most likely that company will have you enter into a contract with them. Before you sign that contract, always read the terms and make sure you understand them. If you don’t – call us, and let our firm have a look at the contract for you.
Some contracts for services have a semi-automatic renewal term. What does this mean? This means if you do not terminate the contract prior to the expiration of the initial term, the contract will then renew for an additional term, usually the same amount of time as the original term.
If you do not provide proper notice under the terms, you can be on the hook for the full amount of the term of the contract if you want to terminate it.
In 2017, the Supreme Court of Canada considered the issue of semi-automatic renewal provisions in contracts, and the Court found that if the term is not ambiguous, the contract will renew in accordance with the terms unless proper notice under the terms is provided.
So, if the value of the term of the Contract is $2,000.00 and you fail to give proper notice or notice at all, and you still wish to terminate that contract, you are obligated to pay that service provider $2,000.00, whether or not you continue with the services under the contract or not.
Always read the fine print of your contracts. Diarize when your contracts end, and more importantly, diarize the earliest date which you must provide notice to terminate your contract(s) so that you do not end up paying more than you have to.
Murray Brown, Paralegal