Automatic Renewal Agreement Unenforceable In New York, Court Rules

Pre-dating Neil Armstrong's first moon-walk by about two years, the New York case discussed in this article is old.

But, given the prevalence today of agreements containing an automatic renewal provision, it is an important case to understand. (Plus, it is still widely cited for the proposition that automatic renewal contracts in New York are unenforceable in certain circumstances.)

Why are automatic renewal provisions more common today?

My theory is that it has to do with premium value placed today on "recurring" revenue. Public-market investors love "recurring" revenue; and, for this reason, it seems like every company these days that is either already publicly-traded or is hoping to eventually be publicly-traded is trying to lock people into automatic renewal agreements--so that the revenue generated from a single customer keeps rolling in each month.

Are automatic renewal contracts enforceable in New York?

Short answer: not always.

Automatic renewals can, and often are, however, misused, to the detriment of those customers who do not wish to be automatically renewed. In that single-minded pursuit, then, it is not uncommon for certain rights to get trampled; and that is why we will look today at a case from 1967 that hinged on the enforceability of an automatic renewal agreement in New York--a case which is still widely cited today.

As the case discussed below shows, automatic renewal contracts are unenforceable in New York in certain circumstances...