An automatic renewal clause keeps a contract running for another term unless someone takes action to stop it. That suits the supplier, and it can suit the customer too, but it catches people out all the time: the notice deadline passes unnoticed and you find yourself committed to another year, sometimes at a higher price. How much the law helps depends mainly on whether you’re a business or a consumer.
How automatic renewal works
A typical clause sets an initial fixed term and then says the contract renews for a further period (often the same length again) unless either party gives notice by a deadline before the term ends. Say a software contract runs for two years and renews for successive one-year periods unless notice is given at least 90 days before expiry. Miss that window by a day and you’re bound for another year. Other contracts simply roll on month to month after the initial term, which is far less risky because you can leave on short notice.
Check exactly how notice must be given. Some clauses require notice in writing, to a particular address or by a particular method, and an email to your account manager may not count.
Business contracts
Between businesses there is no specific statutory protection against automatic renewal. The Unfair Contract Terms Act 1977 is mainly about clauses that exclude or limit liability, so it rarely helps here. If the renewal clause forms part of the contract and is clear, it will generally be enforced as written. One qualification: where a term in standard terms is particularly unusual or onerous, the supplier may need to have brought it fairly to your attention before you were bound by it. That is a fact-specific argument, not something to rely on.
The real protection for a business is negotiation before signing. Ask for renewal periods that are shorter than the initial term, a shorter notice window, a right to end the contract on notice once it has renewed, and a cap on price increases at renewal. After signing, put the notice deadline in your diary with plenty of warning.
Consumer contracts
Consumers have more protection. Under the Consumer Rights Act 2015 an unfair term in a consumer contract isn’t binding on the consumer. A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations to the consumer’s detriment. The Act includes a list of terms that may be regarded as unfair, and one of them is a term that automatically extends a fixed-term contract where the deadline for the consumer to say they don’t want it to continue is unreasonably early. Written terms must also be transparent, meaning in plain and intelligible language and legible. Whether a particular renewal clause is unfair depends on the facts, including how clearly it was explained and how easy it is to cancel.
Separately, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 require traders to give certain information before a consumer signs up, and give a cancellation right for most contracts made online, by phone or away from business premises.
The new subscription contract rules
The Digital Markets, Competition and Consumers Act 2024 contains a specific regime for consumer subscription contracts, including contracts that renew automatically and free or discounted trials that roll into paid subscriptions. It requires clear information before sign-up, reminders before renewals and before trials end, a straightforward way to cancel, and cooling-off rights. When this guide was updated those rules were not yet in force, and the government was still putting the detail in place. Check the current position on gov.uk before relying on them, whether you’re a consumer or a business selling subscriptions.
Red flags in renewal clauses
Watch for a long renewal period with an early notice deadline, notice that has to be given by an awkward method, renewal on whatever terms and prices the supplier is using at the time, no reminder before renewal, and trials that convert to paid subscriptions without a clear warning. None of these is automatically unlawful, particularly between businesses, but each is worth raising before you sign.
If you’ve been caught by a renewal
As a consumer, start by contacting the business and asking it to cancel, pointing out any problems with how the renewal term was presented. If you think the term is unfair, you can say it isn’t binding under the Consumer Rights Act 2015. If you paid by card, ask your card provider whether a chargeback is possible. The Citizens Advice consumer helpline can give guidance and refer matters to Trading Standards. As a business, your options are usually commercial: many suppliers will agree a way out rather than keep an unhappy customer, but they aren’t obliged to.
If you run a business that uses automatic renewal with consumers, make the renewal terms prominent, send reminders before renewal and make cancelling easy. That lowers the risk of an unfairness challenge now and puts you in a better position when the subscription rules arrive. You can see how renewal and termination clauses appear in a sample report, or upload your contract to QuickLegalCheck to have it checked before you’re committed.
Related: what the contract review covers, and a complete sample report.