The Silent Killer in Contracts: Missed Renewal Clauses That Trap Business Owners

NY & NJ Business Litigation Guide — by JDE Law Firm, PLLC

It’s the deadline you never saw coming. The one buried in paragraph 17 of your agreement. The automatic renewal clause that quietly extended your contract for another year — or three — before you even realized it.

Every month, New York and New Jersey businesses get trapped by “evergreen” or automatic renewal clauses. They seem harmless, but they can lock you into unfavorable pricing, outdated services, or bad partnerships. Here’s how to spot them — and what to do before they turn into a lawsuit.

1. What Is an Automatic Renewal Clause?

An automatic renewal clause (often called “evergreen” language) says your contract renews automatically unless you cancel by a certain date — often 30, 60, or 90 days before the end of the term. The catch? Most businesses don’t calendar the deadline, and the renewal takes effect before they notice.

2. Why They’re Dangerous

These clauses are subtle but powerful. A single missed email or overlooked calendar reminder can commit you to another full term — sometimes at higher prices or under outdated conditions. Vendors know this. It’s why renewal notices are often buried or confusing.

In NY and NJ, courts generally enforce these clauses as written. That means if you missed the window, you may be stuck — unless you can show the clause violated specific state laws on notice or consumer protection.

3. The NY/NJ Legal Landscape

New York: Under the General Obligations Law § 5-903, a service provider must give written notice between 15–30 days before the automatic renewal date for certain service or maintenance contracts. Failure to provide that notice can make the renewal unenforceable.

New Jersey: The Automatic Renewal Law (N.J.S.A. 56:12-71 et seq.) requires “clear and conspicuous” disclosure of renewal terms for consumer contracts and advance notice for certain business contracts. Courts are increasingly scrutinizing vague renewal language.

4. How to Protect Your Business

• Calendar renewal dates on day one. Add them to your firm calendar, CRM, or management system immediately.
• Negotiate notice rights upfront. Ask for written notice before renewal — not just fine print buried in the contract.
• Send non-renewal notices early and in writing. Certified mail or email with confirmation is best. Keep proof.
• Review recurring vendor contracts annually. Especially software, maintenance, marketing, or property leases.
• Audit existing agreements. Have counsel review your top 10 recurring contracts for automatic-renewal traps.

5. What to Do If You’ve Already Missed the Window

Don’t panic — but act fast. Even if renewal has kicked in, you may still have leverage if:

• The vendor failed to give required written notice;
• The renewal clause wasn’t clearly disclosed;
• The renewed term is “unconscionable” under contract law; or
• There was a material change in the agreement (pricing, scope, etc.) that wasn’t consented to.

Handled properly, you can often negotiate a clean exit or early termination rather than litigate.

This article provides general information for NY/NJ business owners and is not legal advice. Specific outcomes depend on contract terms and notice compliance.