Legal Question in Business Law in Virginia

Are automatic-rollover service contracts legal in VA? We are a small 27 home HOA with a volunteer board of directors. Our 5 year Trash & Recycling Contract expires at the end of 2016. In September we solicited bids from 4 contractors including our current contractor. Because we are concerned with street wear and tear caused by large vehicles, we inquired about reducing the size and frequency of trucks. Last week we signed a 5 year contract with a small family-owned business that will use 10,000 pound (instead of 40,000 pound) trucks and can reduce weekly pickups from 4 to 3. On Tuesday, December 13, we notified our current contractor that we will not sign a new contract with them in 2017. On Friday, December 16, our current contractor informed us that because we did not give them two months notification of cancellation, their contract will roll over into the 5 year auto-renewal phase in January. However, we can exercise termination of contract with a payout of 6 months [$2800] liquidated damages. Sure enough when we read the contract (negotiated by a former board president) more closely we found this information. Of course, our current contractor never warned us about this contractual obligation during the past 3-month period of our communication via phone and email. Are automatic-rollover service contracts legal in VA? Where do we go from here?

Asked on 12/18/16, 3:38 pm

Michael Hendrickson Law Office Michael E. Hendrickson

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0 attorneys agreed

I would suggest that you arrange for a consultation with a local attorney to review

the relevant paperwork as well as facts involved with this issue and who should then

be in a position to advise you, accordingly. (Also, I am not aware of any Virginia law

which would necessarily make illegal or unenforceable the type of contract which you've described.)

Answered on 12/19/16, 3:51 pm

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