As 2012 nears the end, now is a good time to review your business contracts containing automatic renewal and extension provisions.  The 2009 Wisconsin Act 192, Wis. Stat. § 134.49 (the “Act”) created a new law requiring businesses, including, but not limited to, the health care providers and insurers, to notify their customers of automatic renewal or extension provisions in business contracts.  Generally, this law applies to business contracts involving equipment and services in certain industries, such as health care, construction, food service, consulting, information technology, manufacturing, and some other industries.

  • Business Contracts

Under section 134.49 of the Act, “business contracts” are defined as contracts of lease of business equipment, if such equipment is used in the state or for providing business services in the state.  A business contract should be for the “direct benefit” of the customer or business services.”  Under the Act, a “customer” is a person who conducts business in the state and who is the lessee under a business contract or a “purchaser” under a business contract for the purchase of business services.

Business contracts must make certain disclosures about renewal or extension provisions.  For instance, the law requires businesses to notify their customers how they may decline the renewal or extension of the underlying contract.  Businesses that fail to notify customers will not be able to enforce the renewed contract or extension thereof, i.e. such a contract will be deemed terminated upon the expiration of the preceding term.  Under certain circumstances, the Act also allows customers to bring counterclaims against the business service providers or lessors of equipment.

  • Contracts excluded from the Act

The Act generally applies to business contracts relating to the leases of business equipment or for the provision of business services.  The Act, however, contains numerous exceptions.  For example, the business contracts do not include business contracts for the lease or purchase of real estate property, contracts for the lease of medical equipment, or consumer contracts for equipment or services for personal, family, or household uses.  The Act also excludes contracts related to “energy utility tariffs,” certain vehicles leases, and certain other contracts for telecommunication services.  The Act does not apply to contracts that allow customers “to terminate an automatically renewed or extended contract period” by giving the sellers a notice, if such contracts do not require a more than 30-day advance notice.

Importantly, the Act does not apply to contracts in which “a customer agrees to purchase from a seller an undetermined amount of business services or lease from the seller an undetermined amount of business equipment,” and agrees to pay the seller “based on the amount of business services received or business equipment leased.”  This exception, however, only applies if the business contract containing a predetermined minimum payment of $250,000 or more in a 12-month term.

  • Notice Requirements

The notice requirement under the Act consists of both an initial disclosure about the automatic renewal provision and the reminder notice to be provided upon the renewal or extension of the contract.

The initial disclosure provision requires the seller to inform the purchaser about the renewal or extension either on a separate form when the purchaser enters into the business contract or, in a conspicuous manner, in the contract itself.  The initial disclosure must contain a statement that the business contract will be renewed or extended unless the customer cancels the contract before the automatic renewal or extension period.

An initial disclosure must also inform customers about any increase in fees that would apply upon an automatic renewal or extension, what the customer must do to decline renewal or extension, and the date by which the customer must decline renewal or extension of the business contract.  The reminder notice must contain similar elements as the initial disclosure.

  • Remedies for violations

The Act sets forth specific remedies, allowing customers to bring an action or a counterclaim for damages against a seller for violations under § 134.49.  Damages can include twice the amount of the damages incurred by the customer, including reasonable attorney fees.

Should you have any questions regarding the above-mentioned issues or other business matters, please contact us today.


This article is intended to serve as a general summary of the issues outlined therein.  While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice. Your receipt of this article from Lexern Law Group, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG.  The opinions expressed in this articles are those of the authors of the article and does not reflect the opinion of the LLG.