Sudson Washer and Dryer Service is in the business of leasing used washers and dryers to apartment landlords for a contracted lease term. The coin-operated machines are used by apartment tenants. Letisha, 25, a human resource clerk, owns a five-unit apartment complex. While she resides in one of the units, the others are occupied by tenants. Sudson contacts Letisha and offers to lease one washer and one dryer.
The washer and dryer in Letisha’s apartment complex are old and worn-out. Anxious to keep her tenants happy, Letisha meets with Sudson’s salesman who presents her with a one-page agreement for the use of one washer and dryer for five years. The five-year term is standard and the front page of the contract states the lease period. Letisha (as lessee) and the salesman for Sudson (as lessor) sign the front page of the contract and Letisha retains a copy of the signed agreement.
The salesman did not inform Letisha of, nor did she bother to read the back of the agreement which contained additional terms, one of which is an ”automatic renewal” clause that states: “If the lessee fails to provide a 90-day written notice to terminate the contract by certified mail to the lessor, the five-year lease term period shall automatically renew for three additional five-year terms and shall only be subject to termination by the lessor.”
Letisha uses the machines for the five-year period and just a few weeks prior to the end of the term, calls Sudson to provide them with a courtesy notice saying she is not going to renew her agreement. The operator replies that since she failed to provide the 90-day written, certified notice of termination, the lease will be renewed for three five-year terms or another 15 years.
Letisha says that she never saw that clause. The operator replies that it was her obligation to read the back page of the agreement and Sudson will require her to make monthly payments for the next 15 years. Letisha does not know what recourse she now has.
Research the Internet whether Letisha has a contract formation or enforcement defense based on the legal and ethical use of automatic renewal clauses in lease agreements. Based on the facts of the case and research, write an analytical paper. In the paper, respond to the following questions:
- If Letisha does not pay and Sudson sues her for breach of contract, what legal arguments could be raised in Letisha’s defense against the enforcement of the automatic renewal clause? Explain.
- What legal arguments could be raised by Sudson in support of the enforcement of the automatic renewal clause against Letisha? Explain.
- What ethical issues are raised, if any, by Sudson’s practice of using the automatic renewal clause in their lease agreements? Explain.
- Does the Uniform Commercial Code Article 2A apply in this case? Explain.
- Are there any government or private entities available to Letisha for lodging complaints about businesses which treat consumers unfairly? Explain.
- If Sudson sues Letisha for breaching the contract’s automatic renewal clause, what do you think the outcome of the case will be? Explain.