LRB-0915/4
CTS:nwn:rs
2009 - 2010 LEGISLATURE
May 4, 2009 - Introduced by Senators Wirch, Lehman, Taylor, Holperin, Lassa and
Erpenbach, cosponsored by Representatives Turner, Hubler, Townsend, Vos,
Kaufert, Spanbauer, Bies, Kessler, Hilgenberg and Zepnick. Referred to
Committee on Small Business, Emergency Preparedness, Technical Colleges,
and Consumer Protection.
SB190,1,2
1An Act to create 134.49 of the statutes;
relating to: renewals and extensions
2of business contracts.
Analysis by the Legislative Reference Bureau
Under current law, a landlord may not enforce an automatic renewal or
extension clause in a residential lease unless the landlord provides advance written
notice of the renewal or extension. This bill creates similar requirements for certain
contracts for the lease of business equipment or for providing business services
(business contracts), if the contracts have an initial term of more than one year. The
bill exempts contracts for the lease or purchase of real property, certain contracts
that require the customer to make minimum annual payments of $250,000 or more,
contracts for the lease of vehicles or medical equipment, certain energy and
telecommunications contracts, and contracts that permit a customer to cancel an
automatically renewed or extended contract period by giving notice up to 30 days in
advance.
Under the bill, if a business contract provides that the contract will be
automatically renewed or extended for an additional contract period of more than
one month unless the customer declines renewal or extension, the seller must
provide the customer with a form containing certain disclosures or include the
disclosures in the contract and obtain the customer's initials. The disclosures
include certain information regarding a renewal or extension, including the duration
of an additional contract period, whether increased charges to the customer would
apply, and the deadline for the customer to act to prevent an additional contract
period.
Also under the bill, if a business contract provides that an automatic renewal
or extension results in an additional contract period of more than one year, the seller
must give the customer a reminder notice prior to renewal or extension. The
reminder notice must contain specified information regarding a renewal or extension
and generally must be provided by mail, by personal delivery, in a monthly invoice,
by a facsimile, or by electronic mail. The bill also voids a business contract provision
that requires a customer to permit the seller to match any offer the customer receives
from, or makes to, another seller after the end of the contract's stated term (right to
match provision).
If a seller fails to comply with the bill's disclosure or reminder notice
requirements, the automatic renewal or extension provision is unenforceable and
the contract terminates at the end of the current contract term. Also, if a seller fails
to comply with the reminder notice requirements or attempts to enforce a right to
match provision, the bill allows a customer to bring an action or counterclaim for
damages. In such an action or counterclaim, a seller is not liable if: 1) the seller has
established and implemented written procedures for complying with the reminder
notice requirements and the prohibition against right to match provisions; 2) the
seller's conduct was not willful or malicious; and 3) the seller refunds amounts the
customer paid after the contract was renewed or extended.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB190, s. 1
1Section
1. 134.49 of the statutes is created to read:
SB190,2,3
2134.49 Renewals and extensions of business contracts. (1) Definitions. 3In this section:
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(a) "Business contract" means a contract that is entered into for the lease of
5business equipment or for providing business services, if the contract is for the direct
6benefit of the end user of the business equipment or business services. "Business
7contract" does not include any of the following:
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1. A contract in which a customer agrees to purchase from a seller an
9undetermined amount of business services or lease from the seller an undetermined
10amount of business equipment, and agrees to pay the seller based on the amount of
11business services received or business equipment leased, subject to a predetermined
1minimum payment in a 12-month period specified in the contract, if the
2predetermined minimum payment is $250,000 or more.
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2. A contract for the lease or purchase of real property.
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3. A contract for the lease of a vehicle.
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4. A contract for the lease of medical equipment.
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5. A contract derived from a tariff issued by an energy utility, as defined in s.
7196.027 (1) (c).
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6. A contract for the lease of equipment that is for personal, family, or household
9purposes.
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7. A contract for the purchase of services that are for personal, family, or
11household purposes.
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8. A contract for the lease or purchase of access service, as defined in s. 196.01
13(1b).
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9. An interconnection agreement, as defined in s. 196.01 (3b), or a contract or
15agreement offered by a telecommunications utility, as defined in s. 196.01 (10), to
16meet obligations imposed on the telecommunications utility under
47 USC 151 to
17276.
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10. A contract for the lease or purchase of telecommunications service, as
19defined in s. 196.01 (9m), including commercial mobile service, as defined in s. 196.01
20(2i), if the contract is derived from a tariff issued by a telecommunications provider,
21as defined in s. 196.01 (8p), or if the contract permits the lessee or purchaser to
22terminate the contract after an automatic renewal by giving written notice, permits
23the termination to take effect not more than one month after receipt of the written
24notice, and permits a termination without liability for fees or penalties other than
1a payment for services or equipment used during the period before the termination
2takes effect, if the amount of the payment is one of the following:
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a. The amount of the periodic payment due under the contract multiplied by
4the number of periods during which the services or equipment are provided before
5the termination takes effect.
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b. If the contract does not provide for periodic payments, a portion of the
7amount due under the contract that is proportional to the portion of the renewed
8contract term that elapsed before the termination takes effect.
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11. A contract that permits a customer to terminate an automatically renewed
10or extended contract period by giving the seller notice of the customer's intention to
11terminate the contract period, if the contract does not require the customer to give
12notice to the seller more than 30 days before the date of the customer's intended
13termination.
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(b) "Customer" means a person who conducts business in this state and who is
15the lessee under a business contract that is entered into for the lease of business
16equipment or the purchaser under a business contract that is entered into for the
17purchase of business services.
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(c) "Seller" means the provider of a business service or the lessor of business
19equipment under a business contract.
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20(2) Disclosure required. (a) If a business contract provides that the contract
21will be automatically renewed or extended for an additional period unless the
22customer declines renewal or extension, and the duration of the additional period is
23more than one month, the seller shall do one of the following:
SB190,5,3
11. At the time the customer enters into the contract, present to the customer
2a copy of a form including the disclosures required under par. (b) and obtain the
3customer's signature on the form.
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2. Include the disclosures required under par. (b) in the contract in a
5conspicuous manner and obtain the customer's initials on the contract on a page on
6which a disclosure appears.
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(b) A disclosure required under par. (a) shall contain all of the following:
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1. A statement that the contract will be renewed or extended unless the
9customer declines renewal or extension.
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2. A statement indicating the duration of the additional contract period that
11would result from an automatic renewal or extension period.
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3. A statement indicating whether an increase in charges to the customer will
13apply upon an automatic renewal or extension.
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4. A description of action the customer must take to decline renewal or
15extension.
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5. The date of the deadline for the customer to decline renewal or extension.
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(c) If a seller fails to comply with par. (a), an automatic renewal or extension
18provision in the contract is not enforceable, and the contract terminates at the end
19of the current contract term.
SB190,6,2
20(3) Notice required. If a business contract that has an initial term of more
21than one year provides that the contract will be automatically renewed or extended
22for an additional term of more than one year, unless the customer declines renewal
23or extension, the provision is not enforceable against the customer and the contract
24will terminate at the end of the current contract term unless the seller provides to
25the customer, at least 15 days but not more than 45 days before the deadline for the
1customer to decline renewal or extension, a written notice containing all of the
2following:
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(a) A statement that the contract will be renewed or extended unless the
4customer declines renewal or extension.
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(b) The deadline for the customer to decline renewal or extension.
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(c) A description of any increase in charges to the customer that will apply after
7renewal or extension.
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(d) A description of action that the customer must take to decline extension or
9renewal.
SB190,6,11
10(4) Manner of giving notice. A seller or a person acting on behalf of the seller
11shall give the written notice required under sub. (3) by any of the following methods:
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(a) By mailing a copy of the notice by regular U.S. mail to the customer at the
13customer's last-known business address, unless the contract requires the customer
14to notify the seller by certified mail of the customer's intent to cancel.
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(b) By mailing a copy of the notice by registered or certified mail to the customer
16at the customer's last-known business address.
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(c) By giving a copy of the notice personally to an owner, officer, director, or
18managing agent of the customer's business.
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(d) By including the notice on the first page of a monthly invoice sent to the
20customer. Notice under this paragraph shall be prominently displayed in bold face
21type and in a type size no smaller than 12-point.
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(e) By sending a facsimile to the customer to the customer's last-known
23facsimile number.
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(f) By sending an electronic mail message to the customer at the customer's
25last-known electronic mail address.