Automatic Renewal Clause in UK Contracts: What It Means & Example Wording

When to Include a Automatic Renewal Clause

• In subscription and SaaS agreements where the service provider wants revenue predictability and the customer benefits from uninterrupted service
• In commercial service agreements where continuity of service is important and the parties want to avoid the administrative burden of renegotiating each renewal
• In property leases and licensing arrangements where both parties benefit from automatic continuation

Example Wording

This example wording is illustrative only. Customise it to your specific circumstances and consider seeking legal advice.

Is a Automatic Renewal Clause Enforceable in the UK?

Automatic renewal clauses are generally enforceable in UK B2B contracts. However, in consumer contracts, they are subject to the fairness test under the Consumer Rights Act 2015. The Competition and Markets Authority (CMA) has taken enforcement action against businesses whose auto-renewal terms were deemed unfair to consumers — particularly where the renewal was not clearly communicated, the notice period for cancellation was unreasonably short, or the consumer was locked into a long renewal period. For B2B contracts, the clause should be clearly drafted and the notice period for non-renewal should be reasonable.

Common Mistakes

• Setting an unreasonably short notice period for non-renewal — if the customer must give 6 months' notice to avoid automatic renewal of a 12-month contract, this may be challenged as unfair, particularly in consumer contexts
• Not sending a reminder before the renewal deadline — while not always legally required in B2B contracts, failing to remind the other party can damage the relationship and may be considered sharp practice
• Allowing automatic price increases on renewal without prior notification — the clause should specify how and when any price changes will be communicated