A while ago I wrote about “Contract Red Flags.” Today I’d like to talk about “tricky” contract terms. While these terms often appear “harmless” at the first glance, they often give rise to unforeseen consequences, especially when you change your mind sometime after the execution of the contract.

Automatic renewal: “At the end of the initial term, this contract is automatically renewed for subsequent terms, unless the client gives a written notice of non-renewal at least 3 months before the end of the initial term or any renewal period…”

If you are agreeing to this, you are essentially signing a contract that will run forever. Of course, in theory,  you can put a stop to it. However, in life, most people simply forget or don’t bother to cancel such contracts.

Discretionary increase of fees: “The monthly fee due pursuant to this contract may be increased annually by the company in accordance with its standard practices.”

If you agree to this, you are essentially giving the service provider a signed blank cheque so they can fill in the numbers later. Are you sure you want to do this?

Unilateral modification to the contract: “The client acknowledges that the company may, from time to time, unilaterally modify this contract if such modifications do not substantially affect the rights and obligations of the client.”

While the wording “substantially affect the rights and obligations of the client” is subject to judicial interpretation, consumers rarely bother to contest whether the modifications are really “substantial.” In fact, given the cost of litigation, very few such modifications are worth disputing. In the end, service providers get away with most unilateral modifications to the contract.

The terms above are quite outrageous under close examination. However, they are standardcontract terms in many industries, including telecommunication and advertising.

Sales representatives often do not have the authority to amend the terms according to your preferences. Therefore, you face a “take it or leave it” situation. If you are not unsure about signing a blank cheque over to the service provider, perhaps you should just walk away.