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.
Common in these contract types
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Frequently asked questions about automatic renewal clause
Yes, but many states regulate them — especially in consumer contracts. States like California, New York, and Illinois require clear disclosure and easy cancellation mechanisms. For B2B contracts, enforcement is more straightforward, but courts still look at whether the renewal terms were conspicuous and the notice period was reasonable.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.