The Procurement Glossary » Auto-Renewal Clause
Auto-Renewal Clause
Contracts & Legal
Also known as: Evergreen Clause
Definition
A contract term that automatically extends the agreement for a further period unless a party gives notice to cancel by a deadline.
Explanation
Auto-renewal (or 'evergreen') clauses are convenient but risky: miss the notice window and you're locked in, often at rolled-up prices. Active contract management tracks these dates to renegotiate or exit deliberately.
Example
The subscription auto-renews for a year unless cancelled 60 days before expiry — a date the CLM system flags.
Related terms
- Contract Management — The active administration of contracts through their life — from execution and compliance monitoring to renewal or termination.
- Contract Lifecycle Management (CLM) — The end-to-end management of contracts using software — authoring, negotiation, approval, execution, storage and renewal.
- Termination for Convenience — A contractual right to end an agreement without the other party being at fault, usually with notice and sometimes a fee.
- Contract — A legally binding agreement between buyer and supplier setting out what will be supplied, at what price and on what terms.
Frequently Asked Questions
What is Auto-Renewal Clause?
A contract term that automatically extends the agreement for a further period unless a party gives notice to cancel by a deadline. Auto-renewal (or 'evergreen') clauses are convenient but risky: miss the notice window and you're locked in, often at rolled-up prices. Active contract management tracks these dates to renegotiate or exit deliberately.
Can you give an example of Auto-Renewal Clause?
The subscription auto-renews for a year unless cancelled 60 days before expiry — a date the CLM system flags.
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