What Does “Automatic Renewal” Mean in a Contract?
A provision causing the contract to renew for additional terms unless a party actively cancels.
Detailed Explanation
Automatic renewal (or "evergreen") clauses extend contracts automatically unless someone takes action to stop them. A one-year contract might renew for additional one-year terms unless notice is given 30-60 days before expiration.
These clauses are convenient but can trap parties who forget to cancel. They're increasingly regulated for consumer contracts, but remain common in B2B agreements.
Example in a Contract
“This Agreement shall automatically renew for successive one-year terms unless either party provides written notice of non-renewal at least sixty (60) days prior to the end of the then-current term.”
Why It Matters
Automatic renewal can lock you into contracts you no longer want. Calendar the renewal date and cancellation deadline. Missing the notice window means you're committed for another term.
Related Terms
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