Evergreen Contract Clauses: Forewarned is Forarmed

An evergreen clause, also known as an automatic renewal clause, is a provision that allows a contract to self-renew at the expiration of the current term unless either party notifies the other of an intention NOT to renew.

These clauses appear in many consumer contracts and are particularly prevalent in contracts for service, distribution and supply such as gym memberships, home security systems, landscaping services and magazine or other subscriptions. All is well while the parties continue to agree to do business, however, consumers often find themselves stuck with a service or product they no longer want or use, and unable to cancel until the next term which can range from a few months to years. Therefore, it is wise to be wary of any evergreen clauses.

Noting the business advantage and consumer disadvantage in an evergreen clause, several states require that the consumer be sent an advance reminder notice of the right not to renew prior to the renewal date and/or make the clause unenforceable unless it appears conspicuously in the initial agreement.

However, in Massachusetts there is no requirement of advance reminder notice or conspicuous contract language. In Massachusetts, automatic renewal clauses are enforceable, provided that they also contain a provision that either party may elect not to renew the contract for another term by giving notice to the other party of their intent not to renew. The contract must also provide the number of days required for notice of termination. For example, “This agreement shall automatically renew for an additional term if either party fails to give the other written notice of their intent not to renew at least 30 (or 60, or 90) days prior to the expiration of the current term.”

Nevertheless, should you find yourself with a service you no longer want and locked in by an evergreen clause, you can try to negotiate with the service provider for cancellation or seek legal counsel to evaluate defenses based on contract or other circumstances, such as dissatisfaction or other breach by the business that could be used to end the agreement. The best defense, however, is to be aware of evergreen clauses and comply with the required notice of cancellation.