Legal Glossary
Auto-Renewal Clause
A provision that automatically extends a contract or subscription for another term unless you actively cancel before the deadline.
Legal Definition
An auto-renewal clause (also called an automatic renewal clause or evergreen clause) is a contractual provision that automatically extends the contract for an additional term — usually the same length as the original term — at the end of each contract period, unless one or both parties give written notice of non-renewal before a specified deadline. Auto-renewal clauses are common in subscription software agreements, gym memberships, service contracts, magazine subscriptions, leases, and insurance policies. The FTC and several state regulators have increased enforcement against auto-renewal clauses that make cancellation unnecessarily difficult.
In Plain English
An auto-renewal clause means your contract keeps going — and keeps charging you — automatically at the end of each period, until you actively stop it. The danger is the cancellation deadline: you must give notice by a specific date before the renewal kicks in, not just at the renewal date. Some contracts require 30–90 days' advance notice. Miss that window and you're locked in for another full term and billed accordingly. Many people discover auto-renewal clauses only after they're charged for another year of service they meant to cancel. Look for the cancellation deadline when you sign any subscription or service contract — calendar it immediately.
Real-World Example
James signs a 12-month software-as-a-service contract at $500/month. The auto-renewal clause requires 60 days' written notice before the contract end date to prevent renewal. The contract ends on December 31st. If James doesn't send written cancellation notice by November 1st (60 days before December 31st), the contract automatically renews for another 12 months — committing him to $6,000 more in fees. He forgets, the contract renews in January, and he's legally obligated to pay for the full new year.