united-states contract-law software licensing legal-terms
Automatic Renewal Contract / Contract Law - Licensee Cancels before Expiration Date, but not within 30 day period
<p><em>Has this turned into contract law - can the licensee cancel the upcoming auto-renewal?</em> </p>

<p>Licensee entered into a multi-year software usage contract with Licensor. The software license is a straight forward, "right to use" and includes no support or custom modifications. 15 days before the existing license expires, Licensee calls the Licensor to say they will not be using the software after the current period expires. Licensor says that per contract, Licensee needed to cancel within 30 days and therefor is automatically enrolled into another year period. Licensee insisted on cancelling and days later, Licensor offered the Licensee a partial year term as a reduced rate. Licensee refused this offer too. All this occurs inside the current period, before the next billing period started. </p>

<p>Borrowing from basic contract law, could this "partial year, reduced rate" offer be considered a counter off and does it give the Licensee an opportunity to cancel the automatic renewal terms?   </p>

<p>Based on the additional information you have provided in the <a href="https://law.stackexchange.com/questions/32619/automatic-renewal-contract-contract-law-licensee-cancels-before-expiration-d?noredirect=1#comment59314_32619">comments</a>, the matter seems more complex and more ambiguous than I first thought.</p>

<p>The <a href="https://law.stackexchange.com/questions/32619/automatic-renewal-contract-contract-law-licensee-cancels-before-expiration-d?noredirect=1#comment59313_32619">clause</a> starts with a reference to the initial term only, whereas thereafter it uses the disjunction "<em>initial <strong>or</strong> renewal</em>". Although a licensee's argument premised on the <a href="https://en.wikipedia.org/wiki/Contra_proferentem" rel="nofollow noreferrer"><em>contra proferentem</em></a> doctrine may seem vexatious, this time I am not sure whether the language effectively precludes the licensee's chances to prevail on grounds that automatic renewal only holds for the Initial term.</p>

<p>Another factor that may weaken your position is that, despite the language of the contract, <em>the relationship never functioned like an automatic renewal</em>. The parties' conduct reflects the actual nature of a contract, whence your intent to enforce the contract now that "<em>the new automatic renewal rate being over 50% higher than any previous rate</em>" could be deemed an unfair practice.</p>

<p>This is the first time I have heard about evergreen laws. If your jurisdiction recognizes that regulation/law and you failed to timely send the licensee the requisite reminder, your clause on automatic renewals might be unenforceable.</p>

<p>There is a contract in place. Any offers made to <em>vary</em> that contract, if rejected, leave the original contract unchanged.</p>

<p>The contract had a notice period to cancel its renewal - this is very common and perfectly legal. If the notice period is not observed then it automatically renews for whatever period and whatever rate the contract says it does.</p>

<p>A contract is a set of promises by the parties freely entered into and contract law is <strong>entirely</strong> about holding people to their contractual promises. It doesn't matter if those promises are difficult to comply with or even (in most cases) that they are unjust or inequitable - the legal position is that people are free to make any contract they wish and it is in societies best interest that such contracts are reliable.</p>

<p>At common law, only terms that are <a href="https://en.wikipedia.org/wiki/Unconscionability" rel="nofollow noreferrer">unconscionable</a> or illegal will not be enforced. Consumer protection statutes may lower the bar for particular types of contracts to unfair - but probably not in the United States. However, this term is neither unconscionable nor unfair.</p>
