Auto-renewal
A clause extending a contract automatically unless a party opts out in time.
Definition
An auto-renewal (or evergreen) clause automatically extends a contract for further periods unless a party gives notice within a set window. It ensures continuity but can trap parties who forget to cancel. Dutch consumer-protection rules (Wet Van Dam) heavily restrict silent renewal and long lock-ins for consumer contracts, requiring easy cancellation after the first renewal.
Example
A gym membership renews for another year automatically; under the Wet Van Dam, after the first term it must instead become monthly cancellable.
Why this is a business risk
Auto-renewal clauses generate significant hidden cost for businesses that do not actively manage their contract portfolio. A SaaS subscription, office lease, or outsourcing contract that rolls over unnoticed can commit a company to another year of spend at rates that have since become uncompetitive. On the revenue side, suppliers rely on auto-renewal to retain customers who have disengaged.
How to manage it
- Log every auto-renewal clause and its notice window at the time of signing, not when the window is about to close.
- Set renewal review reminders at least 90 days before the notice deadline to allow time for evaluation and renegotiation.
- For B2B contracts, negotiate a mutual right to prevent renewal with reasonable notice rather than a one-sided auto-renewal that only benefits the supplier.
Legal references
Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.
Frequently asked questions
Common questions about this term.