Limits for automatic renewal clauses in consumer relationships.
The Consumer Relations Law No. 17,250 (hereinafter, the 'CRL') defines in its article 31 those clauses that are considered abusive in consumer contracts: those that, due to their content or the way they are presented, cause a significant imbalance in the rights and obligations between the parties, limiting consumer rights.
Among the list of abusive clauses are those that 'establish the automatic renewal of the contract without enabling the consumer to disassociate from it without liability'.
Thus, up to now, (i) whenever a provider is within the framework of a contract with consumers and (ii) the terms and conditions of such contract are pre-established by it (what the CRL calls an adhesion contract), clauses that provide for the automatic renewal of the contract without enabling the consumer to disassociate without liability are considered abusive.
The legal remedy so far in these cases was: a) the consumer's right to request judicially the annulment of such clauses; or b) the consumer's ability to unilaterally communicate the termination of the contract within 60 calendar days following the date on which the automatic renewal took place (in this case, a 15-day notice to the provider must be given, and once this period has elapsed, the termination would be effective). For example, if a contract was automatically renewed on March 1st, the consumer may choose to terminate it until the following April 30th, provided that it is communicated with the required notice. Likewise, if it is communicated on April 10th, the termination would be effective on the following April 25th.
However, with the new wording introduced by the Accountability Law, clauses that require the consumer to communicate with a specific notice the intention to prevent the automatic renewal of the contract will also be considered abusive.
The consumer's ability to terminate the contract within 60 calendar days following the automatic renewal is still preserved. However, the consumer will no longer be required to give a 15-day notice. In fact, it will now be the provider who will have a maximum period of 15 calendar days - from receiving the consumer's communication - to process the termination.
The new wording also expressly clarifies that this rule applies to consumer contracts involving the payment of a membership fee or affiliation.
Final comments
The new wording introduced by the Accountability Law seems to have the potential to directly affect the validity of many of the clauses currently in the market in contracts between providers and consumers.
This will imply that it is good practice for product and service providers to review certain contractual terms that link them with their customers/consumers, especially regarding the contractual term and the automatic renewal of the contract. This is in order to anticipate possible consumer claims or untimely termination communications, without having had the previous opportunity to estimate costs and benefits.
Montevideo, December 14, 2023
