What is Automatic Renewal Clause?

Definition

An automatic renewal clause (also called an evergreen clause) causes a contract to renew for another term unless one party provides written notice of cancellation before a specific deadline. This is one of the most commonly exploited provisions in leases, SaaS subscriptions, and service agreements. The cancellation window is often short (30 days or less) and buried deep in the contract, making it easy to miss. If you miss the window by even one day, you are locked into another full term with no way out. For example, if your office lease has a 12-month auto-renewal with a 60-day notice requirement, you must send cancellation at least two months before the term ends or you owe another full year of rent. Watch for clauses where the renewal term matches the original term length, where the notice method is restricted to certified mail only, or where the price increases automatically on each renewal cycle.

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