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The Enforceability of ‘Evergreen Clauses’

By on March 29, 2016 in Contracts

Evergreen treesAn increasing presence in contractual transactions is the automatic renewal clause known as the “Evergreen Clause,” writes Andrew C. Voorhees of Weltman, Weinberg & Reis Co., LPA.

“An Evergreen Clause allows for an agreement to continue for a defined period if the existing agreement is not renegotiated or properly cancelled within a specified time. Evergreen Clauses can be found in both consumer and commercial contracts, including Residential Lease Agreements, Advertising Contracts, Gym Memberships, and many other service-based agreements,” he explains. “The question is whether Evergreen Clauses are enforceable, as their effect is to automatically bind a contracting party to an agreement beyond the original contract term.”

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