Evergreen Clauses: Automatic Renewal Provisions
What Is an Evergreen Clause?
An evergreen clause automatically renews a contract for successive periods (monthly, annually, or otherwise) unless one party provides notice of termination within a specified window. The contract keeps going — staying "evergreen" — until someone actively stops it.
Evergreen clauses are extremely common in service agreements, subscriptions, commercial leases, and employment contracts.
How Evergreen Clauses Work
- The initial contract term expires (e.g., one year)
- Without action by either party, the contract automatically renews for another period
- To stop renewal, one party must send a cancellation notice before a specified deadline
- The notice period is typically 30-90 days before the renewal date
- Missing the notice window locks you into the next renewal period
Where You Will Find Them
- SaaS and software licenses — Annual subscriptions that auto-renew
- Commercial leases — Year-to-year renewals after the initial term
- Service provider agreements — Managed services, consulting, or outsourcing contracts
- Insurance policies — Annual renewals unless canceled
- Gym memberships and consumer subscriptions — Monthly auto-renewals
Common Pitfalls
- Buried notice deadlines — The cancellation window may be narrow and easy to miss
- Price escalation on renewal — Some evergreen clauses allow the provider to increase pricing on each renewal
- Changed terms — The renewed contract may incorporate updated terms of service that differ from the original
- Difficult cancellation procedures — Requiring written notice by certified mail or other cumbersome methods
Consumer Protection Laws
Many states have enacted automatic renewal laws (like California's ARL) requiring businesses to clearly disclose evergreen terms and provide easy cancellation methods. These laws may void non-compliant auto-renewal provisions.
When to Consult a Lawyer
Consider having an attorney review evergreen clauses in significant contracts, especially regarding notice requirements, pricing changes on renewal, and applicable consumer protection laws.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.