Contract Glossary

Automatic Renewal Clause

Definition

A provision that extends a contract for another term unless one party gives notice before the renewal date. Also called an evergreen clause. If you miss the cancellation window, you're locked in for another cycle, whether that's a month, a year, or longer.

In Practice

You sign a 12-month SaaS subscription for your business. Buried in the terms is an automatic renewal clause requiring 60 days' written notice to cancel. You decide to switch providers in month 11, but you're already past the cancellation window. You're on the hook for another full year. This is extremely common in software licenses, office leases, and service agreements, and it catches people off guard constantly.

Example Clause

This Agreement shall automatically renew for successive one (1) year periods unless either Party provides written notice of non-renewal at least sixty (60) days prior to the expiration of the then-current term.