PA 07-215—sHB 7204

General Law Committee

Judiciary Committee

AN ACT CONCERNING THE ENFORCEABILITY OF AUTOMATIC CONTRACT RENEWAL PROVISIONS

SUMMARY: This act (1) establishes requirements relating to contract renewal provisions in certain refuse removal contracts and (2) revises requirements relating to automatic renewal provisions in consumer contracts.

It makes provisions in certain commercial refuse removal or disposal contracts that renew a contract for a specified amount of time unenforceable in court unless the person against whom the contract is to be enforced initialed or signed a conspicuous statement immediately following the renewal provision stating, “I acknowledge that this contract contains an AUTOMATIC RENEWAL provision. ” The statement must be in 12-point boldface type. The requirement applies to written contracts and to electronic contracts that comply with the Connecticut Uniform Electronic Transactions Act, which establishes a legal foundation to use electronic communications in transactions in which the parties have agreed to conduct business electronically. The act exempts from these requirements (1) contracts in which the automatic renewal period is less than 32 days and can be cancelled without penalty or damages at any time and (2) consumer contracts.

By law, anyone who sells or offers to sell consumer goods or services under a written contract that (1) will last longer than 180 days (six months) and (2) includes a provision automatically renewing it for more than 31 days, must provide a clear and conspicuous written notice informing the purchaser that he or she can cancel the contract. The notice must include the cancellation procedure and under prior law had to be provided at least 15, but not more than 60, days before the end of the contract term. The act instead requires the notice to be sent between 15 and 60 days before (1) the renewal date or (2) the end of the time for cancellation, whichever is earlier. The act allows the notice requirement to be satisfied by sending a written notice by U. S. mail; and if the consumer entered the contract electronically or agreed to receive notices electronically, the notice may be transmitted electronically.

EFFECTIVE DATE: October 1, 2007 and applicable to contracts entered into on and after that date.

BACKGROUND

Renewal Clauses in Shorter Consumer Contracts

The law also requires anyone who sells or offers to sell consumer goods or services under a written contract that (1) will last up to 180 days and (2) includes a provision automatically renewing it for more than 31 days, to include in the contract a clear and conspicuous notice that the recipient may cancel the contract and the cancellation procedure. It prohibits requiring the consumer to exercise his or her cancellation right more than 60 days before the scheduled end of the contract term.

If contracts with automatic renewal clauses do not contain the required notices, the law deems any product or service provided to the consumer after the scheduled end of the contract to be an unconditional gift without any obligation on the recipient's part. A violation of the law's requirements is deemed to be an unfair trade practice. The law exempts certain types of consumer contracts from the renewal provision requirements.

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