Your company will sign a lot of legal agreements in its lifespan. Some of these contracts can have complicated language within them that determine when and how a contract is renewed. Evergreen contracts are used by a lot of telecommunications service providers for many different reasons, but aren’t always the best agreement for your business. At America’s Phone Guys, we think of our customers as friends. We always want you to have the best information available. There are a number of phone service providers in our area that have contracts with these types of clauses and they can be extremely difficult to get out of.
What is an Evergreen Contract?
These contracts are agreements that automatically renew, regardless of whether you want to sign another contract with the carrier. This can be convenient for services you won’t ever want to cancel–but how many of those does a typical business have? Sometimes evergreen contracts are “evergreen” because of fine print buried within the contract itself. These contracts can also be used to lock in a special rate. This is exactly why you should examine every contract with care.
Evergreen contracts can produce quite a bit of frustration, and the process for termination often depends upon the terms set out in the contract. Here’s our best advice on how to avoid these evergreen contracts and to escape them if you are already stuck in one.
Avoiding Evergreen Contracts with Vendors
As with any contract, you want to make sure you’re entering into a fair deal for services that you need. Evergreen contracts aren’t necessarily all malicious–sometimes they’re used by vendors and service providers to save everyone negotiating time. However, unless you’ve had a specific conversation about the evergreen language in your contract, be wary! Many vendors and service providers are eager to lock their customers into an agreement.
You always have the ability to negotiate a contract, especially if there’s evergreen language. If there are any provisions that make you nervous, or that you don’t want in your service agreement, ask the provider to take that language out. If they refuse, it’s time to make a decision on whether or not that provider is the right company for you to work with.
What to Do if You’re Stuck in an Evergreen Contract
If you’re currently in a contract with a vendor who has included evergreen language, you have a number of options.
1. Ask for the contract termination date.
a. If it’s not clear when your contract is up for renewal, ask their customer service team directly. Most contracts have a 60 or 90 day window before the contract automatically renews, so you can cancel or renegotiate.
2. Look over the contract for any early termination information or penalties.
a. If the end of the contract is still months or even years away, look for an early termination fee or penalty that may be assessed if you cancel. Sometimes the penalty is worth it, especially if you’re moving offices out of state or a competitor is offering substantially lower rates.
3. Assess the situation: can you wait it out a little longer?
a. If you only have a couple of months to go on your contract, consider staying in the contract but letting them know now that you’d like to end the contract at the end of the term.
4. If the cons of staying in the contract outweigh the penalties, cut your losses and terminate the contract.
a. If it’s a high cost service that is low quality, or you can save a substantial amount of money by breaking the contract now, the penalty–even if it’s high–may be worth incurring. This is subject to your company’s own policies and guidelines for what kinds of losses are acceptable.
5. Termination by default.
a. If the service provider has stopped providing service, you may have the right to terminate services.
b. This always varies per contract and even per state law, so be careful to get the proper legal advice before pursuing this option. You may have to wait a certain period of time without service before you can terminate the agreement.
6. You may be able to terminate by mutual agreement.
a. If you’d like to terminate the agreement, there’s always a chance the service provider will let you without penalty. You won’t know until you ask!
b.You’ll have to draw up a separate termination agreement: always get this in writing, and always have both parties sign it. This agreement then supersedes any other previous contract.
Evergreen Contracts are Complicated
Given everything we’ve outlined here, you may have a better idea of what your company is willing to agree to within a contract. Whenever a service provider offers you a contract, look it over carefully. You may even want a lawyer to look it over to make sure you fully understand what agreement you’re entering into. If you’d like advice or recommendations from America’s Phone Guys on specific service providers and their contracts, contact us today!
Getting Telecom Carriers to Remove Evergreen Clauses in Their Contracts in Portland OR and Vancouver WA
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