Auto-Renewal Clause
Also called: Automatic Renewal · Evergreen Clause · Rollover Clause
An auto-renewal clause extends a contract automatically at the end of its term unless a party gives notice to stop it within a specified window. Missing that window commits you to another full term, often at a price the supplier may unilaterally adjust.
In more detail
The commercial risk is the notice window, not the renewal itself. A clause requiring 90 days’ notice before a 12-month renewal means the real decision deadline arrives nine months into the term — long before most teams start thinking about it.
Auto-renewal frequently pairs with a price-escalation right, so the renewed term may not be on the same commercial terms as the original. Reading the two clauses together is what reveals the actual exposure.
Operationally, the defence is calendaring: the renewal decision date belongs in a system, not in someone’s memory. This is exactly the failure mode contract-management tooling exists to prevent.
What our lawyers check
- The length of the notice window and when the real decision deadline falls
- Whether the renewal term matches the original or extends longer
- Whether price can change on renewal, and by how much
- Whether notice must be given in a specific form to be valid
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
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