Paying attention to the anniversary date of a contract to avoid it being automatically renewed for another year

Once a contract auto-renews, it can be difficult and costly to try and get out of it outside the anniversary date. This is why members should terminate a contract before the renewal date. There is a process to get out of the contract even if it renews. But first, determine if the details of the contract will make it worth the time and effort.

Evergreen Clauses – the Good and the Bad

Evergreen or “automatic renewal” clauses have their benefits. For example, leaseholders who agree on an auto-renewal payment schedule with the landlord can enjoy more price stability. In the case of businesses, the term of a contract being set to “evergreen” means that the anniversary date would come and go and customers can be retained without extra funds being spent on retention efforts. Evergreen clauses are, sometimes, open to negotiation even past the anniversary date. And, if they are, members should take advantage of this to gain more favorable conditions. They can request that they enter a “month-to-month” arrangement, which will be slightly higher in cost but save the trouble of termination.

Determine Termination by the Anniversary Date

Evergreen clauses constitute the “term” or duration of the contract. There is usually a portion regarding terms of voiding or breaking a contract before the anniversary date. Some are quite specific, outlining exactly what the conditions of the account should be, how much prior notice is required, and how much is owed as a penalty, should the contract be broken. Many contracts require the process be initiated by a letter. Others may stipulate that only a meeting with a manager can initiate a termination of contract mid-term. Individuals may ask to insert a clause about unsatisfactory performance being grounds for termination, regardless of anniversary date. Of course, this will require individuals to document the events leading up to the “unsatisfactory performance” as proof.

Are evergreen clauses enforceable by law? It depends on the laws of the country the contract was drafted in and whether or not the clause itself violates other consumer protection laws. Consequences may range from a fine or penalty for cancellation to something more serious like a breach of contract or a suit for damages.