Contract Terms: locked in forever

padlock-contractHere’s a common scenario:  Jimbo, the maintenance manager for a local hotel, calls and says he’s fed up with Bigg Elevator and wants us to quote his elevator maintenance.  We give him some competitive pricing, he’s ready to switch, and he calls Bigg Elevator to cancel his contract.  After 2 weeks of leaving voice mails, he finally catches a sales rep who looks up his contract and says, “sorry, our contract doesn’t expire for 4 more years.”

What?  Could that be true?  Jimbo remembers signing the contract more than 10 years ago.  Is he really locked in for 15 years?  He digs his contract out of a dusty file and it says something like this:

“This contract shall commence on January 1, 2003 and shall continue for a non-cancellable period of 5 years.  It shall automatically renew for additional 5-year periods unless either party delivers written notice at least 120 days in advance of any renewal date, of their intent to terminate this agreement.”

In English:  You’re locked in for 5 years.  If you miss the window to terminate, you’re locked in for another 5 years.

Lessons for you:

1. Don’t sign a contract with more than a one-year term.  If you’re unhappy with the service, you want to be able to find a new provider.  An elevator company should be confident enough in their work that they don’t need to rely on handcuffs to make you stick with them.  Said another way, a customer having the power to terminate is a motivator for the elevator company to provide most excellent service.

2. It’s okay to have an automatic renewal provision.  If you’re happy with the service, it will auto renew.  Easy peasy.  But make the termination window something shorter, like 30 days before the anniversary date.

3. Cancel early.  If you want to terminate the contract, or even if you just want to bid it out when it comes up for renewal, send a cancellation notice now.  Don’t wait until 121 days before the expiration and rely on a calendar note to remind you 2 years from now.  The reminder might pop up on a weekend, or while you’re on vacation, or in the hospital recovering from surgery.  Send it now, and if Bigg Elevator calls you up asking why, just tell them you’re sending early notice to make sure you don’t miss the deadline.  Reassure them that you’ll be happy to have them bid on the renewal, and that if they provide you most excellent service between now and then, that will give them a leg up on the competition when it comes time to bid.

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4 thoughts on “Contract Terms: locked in forever

  1. Terrific advice for all our property mangers and owners to remember. It’s so hard when I see the hope drain from their unexpecting faces as they think they are finally free, just to find their locked in to another 5 years! It’s easy to stay focused on whats important by keeping track of renewal (roll-over) terms Renew or change when YOUR ready! Great advice 🙂

    Liked by 1 person

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