Renewal Clause template clause

    Updated: 22 March 2026

    Please note: these example clauses are intended as a starting point, not as legal advice. Always adapt the text to your specific situation and have important contracts reviewed by a legal professional.

    Clause text

    Article [X] - Contract Renewal

    1. This Agreement shall commence on [start date] and shall continue for an initial term of [duration] ("Initial Term").

    2. Upon expiry of the Initial Term, this Agreement shall automatically renew for successive periods of [renewal period] each ("Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least [notice period, e.g. 90 days] before the end of the then-current term.

    3. Notice of non-renewal shall be given by registered letter or email with read receipt to the addresses specified in Article [Y].

    4. During any Renewal Term, the terms and conditions of this Agreement shall remain in full force and effect, subject to any price adjustments permitted under Article [Z].

    5. Either Party may propose amendments to this Agreement no later than [e.g. 60 days] before the start of a Renewal Term. If the Parties do not reach agreement on the proposed amendments within [e.g. 30 days], the proposing Party may elect to terminate this Agreement at the end of the then-current term by providing written notice within [e.g. 14 days] after the negotiation period expires.

    What does this clause mean?

    A renewal clause sets out whether a contract continues after its initial period ends, and under what conditions. Without a clear renewal mechanism, contracts can lapse unexpectedly or roll over into terms that no longer reflect the commercial reality.

    This template uses automatic renewal (also called "evergreen" renewal), meaning the contract extends by default unless one party actively opts out. Automatic renewal provides continuity for ongoing service relationships, but it requires that both parties track notice deadlines carefully. Research from Loio (2026) shows that 71% of contracts are never monitored for compliance after signing, which means renewal deadlines are frequently missed, locking parties into unwanted extensions.

    The clause also includes a mechanism for proposing amendments before each renewal, giving both sides an opportunity to renegotiate pricing, scope, or service levels.

    When should you use this clause?

    Include a renewal clause in any agreement that runs for a fixed term and may need to continue beyond it. This is particularly important for supplier contracts, software licences, facility management agreements, and outsourcing arrangements.

    If your organisation handles a large volume of contracts, automatic renewal reduces administrative effort but demands disciplined deadline tracking. According to World Commerce & Contracting, businesses lose an average of 9.2% of annual revenue due to poor contract management, and missed renewal windows are a common contributor to that figure. A contract management tool that flags upcoming deadlines can prevent costly automatic extensions.

    Customize these elements

    • 1Adjust the notice period (30, 60, 90 days) to match your industry standard and internal approval timelines
    • 2Choose between automatic renewal and manual opt-in renewal depending on the contract value and risk
    • 3Specify whether renewal terms can differ from the initial term length
    • 4Define the communication method for non-renewal notices (registered post, email, or both)
    • 5Add a cap on the total number of renewals if you want a natural end date

    Sources

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