An evergreen clause is a provision that keeps a contract running after its initial term ends, automatically, unless one party gives notice to stop it. It is also called an automatic renewal or auto-renewal clause. Nothing happens when the term ends; the contract simply continues, often for another full term and often at a new price.
What an evergreen clause looks like
The wording varies, but the pattern is always the same: a term, a renewal that happens by itself, and a way out that requires notice. Three common versions:
This Agreement renews automatically for successive periods of twelve months unless either party gives written notice of non-renewal at least 60 days before the end of the then-current term.
After the initial term, this Agreement continues on a month-to-month basis until terminated by either party with 30 days’ written notice.
This Agreement remains in effect until terminated by either party on three months’ notice to the end of a calendar quarter.
The first renews in fixed blocks, so missing the deadline commits you for another year. The second and third roll over in small steps, so a missed deadline costs much less: a month or a quarter.
Evergreen vs. automatic renewal
People use the two terms interchangeably, and so do most contracts. When a distinction is made, “evergreen” usually means a contract that continues indefinitely until someone ends it, while “automatic renewal” means it renews for fixed periods. For you, the practical question is the same either way: how long does each renewal commit you, and how much notice do you need to give to stop it?
How to spot one
Look in the sections on term, duration, renewal and termination for phrases like these:
- “renews automatically” or “shall automatically renew”
- “for successive periods of” or “for additional terms of”
- “unless either party gives notice” or “unless terminated”
- “continues in effect until terminated”
- “month-to-month” after an initial term
Also check the order form and any online terms the contract refers to. Software subscriptions often put the renewal rule in terms of service on a website, not in the document you signed.
Why vendors like them, and when they suit you too
Evergreen clauses keep revenue predictable for the vendor and save both sides the paperwork of signing a new contract every year. For services you rely on and are happy with, such as your payroll provider or office cleaning, that is convenient.
The risk is on your side when you stop paying attention: a tool nobody uses anymore, a phone plan you meant to switch, or a price increase that takes effect with the renewal. The renewal happens without anyone being asked.
What to negotiate before you sign
You don’t have to refuse an evergreen clause, but several of its terms are negotiable:
- Shorter renewal periods. Month-to-month or quarterly after the first term limits what a missed deadline can cost.
- A shorter notice period. Thirty days is easier to manage than ninety.
- A reminder from the vendor. Ask for written notice of the upcoming renewal, say 30 days before your deadline.
- Notice by email. Make sure an email to a named address counts as written notice.
- A cap on renewal price increases, for example the change in the consumer price index or a fixed percentage.
What to do with the ones you already have
For each contract with an evergreen clause, note the end of the current term, the notice period and how notice must be given, then work out the deadline. The notice deadline calculator does the counting, and how notice periods are counted explains the rules behind it. When you decide to end one, how to stop a contract from renewing automatically walks through giving notice properly.
Some states limit automatic renewal clauses, mostly in consumer contracts, though a few reach business contracts too. Whether one applies depends on the contract and the state.