Legal Question in Business Law in California

Re: Contract Renewal

Yes it is generally called an evergreen clause. However, there are some limitations as to notice and length of automatic renewal. This clause would need to be in the contract, however.

Re: Contract Renewal

Yes, there are two ways a contract can renew automatically. The first is when the contract itself contains a clause extending or renewing itself.

For some agreements such as residential leases and consumer contracts there may be special requirements for the placement or type size of the automatic renewal provision. However, it is a general principle of contract law that, despite some exceptions, parties are free to negotiate, write and enter into whatever agreements they want.

The second way contracts can renew automatically is a lot less formal. This happens when the original contract expires, but both parties go on doing business with each other just as though the contract had not expired. In such cases, which are pretty common, the courts will hold that the "express contract" (oral or written) has indeed expired, but has been replaced by a "contract implied in fact" on substantially the same terms and conditions as the original express contract. An example might be where a restaurant laundry service is signed up for two years. When the contract expires, the restaurant continues to use the tablecloths and napkins provided, and the service continues to pick up the dirty ones and deliver fresh supplies. If there is a dispute later on about price or quality, the court is very likely to rule that the parties extended the old contract by their conduct, even though nothing was agreed upon either orally or in writing.

Re: Contract Renewal

The terms of the contract determine that. Read it. If you end up needing legal help, i.e. a lawsuit or threatened with a disputed interpretation, feel free to contact me.