Reasons Why You Should Avoid A Lease Contract With An Evergreen Clause

A contract with an evergreen clause may be legal, but it’s definitely unethical.

evergreen clauseTo begin with, an evergreen lease–or evergreen clause as simply known–is a perpetual contract that automatically renews itself at the end. Yes, this contract has an end, but it can only expire after the leaseholder sends a letter to the leasing company, within a specified period of time, stating his intent to purchase or return the equipment in question. Practically, this procedure is often times made cumbersome by leasing companies. And as it turns out, leaseholders usually end up paying more than what was originally agreed at the beginning of the contract.

An evergreen clause is schemed to lock you in a contract. At this point, it’s suffice to say that this type of a contract unequivocally gives the lessor a fertile ground to lock you in a contract. And if the underlying company has any intentions of scamming you, then you’ll unwittingly fall for their trap. For example, if the company wants to prevent you from renewing the contract, they can easily create onerous hurdles to push you out. Also, if the lessor intends to keep you in, he (or she) can easily do so by creating a window at the end of the term or by narrowing the time you have in presenting the opting-out-notice.

Reasons To Avoid An Evergreen Clause

“Lock In Your Price”

Most leaseholders who enter into a contract that has this type of clause are usually fooled by their providers into believing that they can use the clause to take advantage of the downward pricing pressure. But hey, if you’re thinking of taking your chances with an evergreen clause simply because someone said it can help you to “lock in your price,” be plausible enough to answer this simple question, how? For one, in any competitive economy, prices rarely shoot up. And two, if prices really shot up as purported, you will still have the choice to opt out.

An evergreen clause will deny you the opportunity to renegotiate or to make demands. Evergreen lease can breed complacency between you and the lease provider. That’s to say, if you’ve been in a contract for certain duration of time–say, a year, and you really feel like you’re in a better position to renegotiate or make demands on pricing, delivery options, or the responsive time, this type of contract will definitely deny you that opportunity.

Hard To Get Out

Getting out of an evergreen contract is not as simple as, say, submitting a notice and you are instantaneously out. As a matter of fact, if you can afford to go through the process without involving a lawyer, count yourself lucky. To drive the main point home, let’s take a simple scenario to illustrate how things generally go when one wants to get out of such a contract:

Let’s say you want to get out of a contract that demands a notice within 30 day of termination–“not sooner, not later” (in most cases, such a notice will be accompanied by a number of conditions; part of which include, “termination notice will only be accepted if the account has no balance). Now after submitting your notice, the company will get back to you with another notice that states that your contract still owes them money and has to therefore reject the notice. The worst part is that, by the time you get this notice, the 30 days would have already elapsed and you will be hooked to another contract.

They Work Against You

At this point, a simple question may suffice, “why should you choose something that works against you?” From the illustrations above, it’s apparently clear that evergreen clauses only work for service providers.

The Easiest Way To Get Out Of An Evergreen Contract

To conclude, there’s an easy way to get out of an evergreen contract. And that is; not signing up for a contract with an evergreen clause. Of course, as logic would point out, the easiest way to get out of something has always been to turn your back whenever there’s a looming danger ahead. And if a lesson can be drawn from that, then it should be: every time a lessor is not willing to remove the evergreen clause from the contract, to keep it plain and simple–take a leap before things get rough.

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