When does "evergreen"clause apply"

QUESTION:

Good Morning Mr. Kirschhenbaum,

            In interpreting the 5 states that passed Evergreen Laws, it is my understanding that these laws apply to contracts signed on or after the date each law was enacted.  However, the recent lawsuit between the Connecticut Attorney General and Safe Home Security does not seem to support this theory.

            Can you please offer some clarity around this situation so that our Company ensures that we are aligned with these laws and following them accordingly?

            Your assistance is greatly appreciated.

Thank you,

Elizabeth

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ANSWER:

    This question comes from Connecticut and refers to the previously discussed matter involving the Attorney General of Connecticut and Safe Home Security, a Connecticut alarm company.  The AG complained that the alarm company was not complying with the state's automatic renewal clause.  One defense that the alarm company raised was that its contracts were signed before the state law was passed and therefore the state law didn't apply. 

   This question addressed that issue.

    Most statutes indicate when they become effective.  Clearly a renewal statute would apply to those contracts executed after the enactment date.  What about all those contracts that were signed before the renewal statute is effective.  And, keep in mind that we have posted renewal statutes in very few states.  You can check your state here: http://www.kirschenbaumesq.com/autorenewal.htm If we left your state out let me know.

    Although laws generally will not affect contracts that pre date the enactment of the law unless the statute provides for that [and that raises constitutional issues], renewal statutes really only provide for notice of renewal.  Only one state prohibits them. 

   So with pre existing contracts, once the statute is effective, you would be required to provide notice of renewal once the current term was up.  So it's not the contract but the notice of renewal that changes.  You can still renew; you just need to give notice.

    So to answer the question, you sign up contracts with renewal clauses.  Some are in original term and some are in renewal term.  A renewal statute is enacted.  Those contracts then in renewal are still valid until the next renewal term.  You will have to give notice of renewal per the statute requirements when contracts come up for renewal after the statute is enacted.

    That's how I would advise you.