Automatic Renewal Clauses: The Case between Letisha and Sudson Washer and Dryer

1688 WordsDec 27, 20137 Pages
Automatic Renewal Clauses: The Case between Letisha and Sudson Washer and Dryer Abstract This paper examines a contract between Letisha and Sudson Washer and Dryer that contains an automatic renewal clause. The potential defenses for Letisha if Sudson sues her for breach of contract are presented. The defenses for Sudson that support the automatic renewal clause are also discussed. The ethical issues of using an automatic renewal clause and the actions of the Sudson Washer and Dryer representative when signing the contract are also examined. Section 2A of the Uniform Commercial Code and how it applies to this case is presented. There are also government and private entities that Letisha can complain to about the business…show more content…
It is not the fault of the company, if the lessee signed the contract without reading it fully and failed to give notice of cancellation before the deadline. If the clause is stated clearly, then it is likely that it will be enforced by the courts. For example, in the case of Winthrop Resources Corporation v. Spearhead System Consultants, the court found that because intentions to terminate the contract were not made clear before the time allotted in the contract, the renewal of the contract was enforceable (Huddleson, Graynor, Flick, & Whelan, 2003). Ethical Issues While Sudson’s automatic renewal clause may be upheld, there are ethical issues of the company using such a practice. First, many courts have had the opinion that parties should be notified when the lease is up for renewal (Leitess, Ihne, & Goldberg, 2005). It is unlikely that the client would remember about the clause five years later, and the company should be willing to make a courtesy call in order to keep customers happy. Also, all parts of the contract should have been discussed before signing. Not informing the client of the automatic renewal policy does not reflect well on Sudson Washer and Dryer Service. The National Association of Equipment Leasing Brokers states in their code of ethics that leasing companies should remain honest and professional in all business transactions (“NAELB,” 2013). In this case, not discussing all parts of the contract

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