Automatic Renewal Clause: Terms and Conditions for Renewal

This Agreement shall automatically renew for successive one (1) year terms unless either party gives the other party written notice of non-renewal at least three (3) months prior to the end of the then-current term. The renewal terms shall be on the same terms and conditions as set forth in this Agreement unless otherwise agreed in writing by the parties.

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Explanation

Here is a plain English explanation of the Automatic Renewal of Agreement clause:

This clause states that the contract will automatically renew for additional 1 year terms after the initial term ends.

It will keep renewing for extra 1 year periods unless one of the parties gives written notice that they don't want to renew. This notice must be at least 3 months before the current term ends.

The renewal terms will stay the same as the original contract, unless the parties agree in writing to change them.

In simple terms, this clause means the contract will automatically keep renewing year after year unless one party gives advance notice they want it to end. The terms remain unchanged for renewals.

History of the clause (for the geeks)

Automatic renewal clauses emerged in the 19th century as a contractual innovation and gained popularity in the 20th century's subscription economy.

Their use proliferated with digital services and SaaS in recent decades.

Traditionally, contracts had fixed terms and required manual renewal. But open-ended agreements with automatic renewals provided more business continuity. Early instances appeared in newspaper subscriptions and property leases in the 1800s.

By the early 1900s, many publishers and landlords included automatic renewal provisions. As more goods and services moved to ongoing subscriptions rather than one-off exchanges, rollover clauses became commonplace. Businesses liked securing revenue continuity, while consumers faced concerns about getting locked-in.

Digital transformation in the 1990s-2000s accelerated automatic renewals as software and cloud services relied on subscriptions. E-commerce automated periodic billing, often renewing by default. This improved vendor revenue reliability but also attracted scrutiny from regulators over transparency.

Now automatic renewal is pervasive across sectors. But heightened legal obligations exist for disclosing terms and enabling consumer cancellation.

Clear advance notice and consent requirements balance business flexibility against customer protection and choice.