Auto-Renewal Clauses in Ontario Contracts: When the Agreement Doesn’t End
Auto-renewal clauses are often overlooked.
They operate silently.
How They Work
The contract renews automatically unless notice is given within a defined period.
That period may occur well before the end of the term.
If notice is not given, the agreement continues.
Timing Risk
The issue is not the existence of the clause.
It is the timing.
Notice periods may be set months in advance. If they are missed, termination rights are effectively delayed by another full term.
Operational Impact
This becomes relevant when the business wants flexibility.
A relationship that no longer makes sense continues because the window to exit has closed.
The Practical Takeaway
Auto-renewal clauses do not create obligations.
They extend them.
The risk is not in renewal itself, but in missing the opportunity to prevent it.