Legal Question in Business Law in California
My company signed a rental agreement for a copier in December 2007. The original agreement was for a 24 month term, with the option to renew the agreement upon expiration of the original agreement, for an additional 24 month term at the original agreements terms.
The rental agreement does not state that the agreement would �automatically� renew for the additional 24 month term at the end of the original 24 months.
My company continued to make payments on the copier at the original 24 month term rates after the expiration of the original agreement, without signing or officially stating that we would like to renew for the additional 24 month term.
I questioned the company on whether or not we were in a binding agreement for the additional 24 month term, as we did not sign any documentation stating the fact. The copier company is stating that because we continued to make payments on the copier at the rate of the original agreement, even after the expiration of those terms, that we �Implied� that we wanted to renew the rental agreement for the additional 24 month period.
My question to you as an all powerful attorney at law:
Since the original agreement expired and we did not sign an agreement stating we would like to continue with an additional 24 month term, is our continued payment for the copier an �Implied� agreement/contract? The additional 24 month period would be in its 15th month at this point.(so we have made 14 payments since the end of our original agreement ending.
As well, will this �implied� agreement/contract hold up in court if we decide to stop using their equipment and they subsequently sued us for nonpayment?
2 Answers from Attorneys
The first thing I would recommend you do is re-read your lease agreement. Somewhere in the fine print it probably discusses renewals and extensions after the initial term. I would be quite surprised if it did not; renewals, extensions, buy-outs, returns and residuals are so important to the economics of the equipment-leasing business. Also, upon quick scan of Commercial Code Division 10 covering leases of personal property, I did not see any provision of law respecting payment of rent as creating an automatic extension.
No attorney can answer that question without reviewing the lease agreement to determine how the renewal option was to be exercised.
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