AUTOMATIC RENEWAL CLAUSE Meaning and
Definition
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An automatic renewal clause, also known as an evergreen clause or rollover clause, is a legal provision commonly found in contracts that enables an agreement to automatically renew for an additional term or period unless either party gives written notice of termination within a specific timeframe. This clause is frequently seen in various types of contracts such as subscription agreements, lease agreements, service contracts, and membership agreements.
The automatic renewal clause is designed to ensure continuity and convenience for both parties involved in the agreement. It eliminates the need for constant renegotiation or reauthorization of contracts and allows for uninterrupted services or subscriptions. However, it also poses potential risks for individuals or organizations unaware of the existence of such a clause, as they may unintentionally extend a contract indefinitely or become legally obligated to continue the agreement despite their desire to terminate it.
To avoid any unwanted extensions, it is crucial for parties to carefully review and understand the terms and conditions of a contract before signing. Paying close attention to automatic renewal clauses ensures awareness of the requirements for termination and provides the opportunity to negotiate or request changes to the clause if necessary.
In summary, an automatic renewal clause is a contractual provision that specifies the automatic renewal of an agreement for a set period unless one of the parties provides written notice of termination within a specified timeframe. Both parties must be aware of and understand the clause's requirements to prevent unintentional contract extensions or obligations.
