Evergreen Contract
A contract that automatically renews at the end of each term until one party takes action to terminate it.
An evergreen contract is an agreement that automatically renews at the end of each term for an additional period of the same or similar length, unless one party provides notice of termination within the required notice window. Evergreen contracts are common in software subscriptions, service agreements, and vendor relationships where the expectation is that the relationship will continue indefinitely. The term comes from the idea that the contract stays perpetually "green" or active without requiring active renewal.
Why It Matters Evergreen contracts are one of the most common sources of unwanted financial commitments for businesses. Because they renew automatically, they require no action to continue, which means they also require no action to miss. A subscription or service agreement that auto-renews for another year because nobody caught the notice deadline represents a real cost that could have been avoided with proper contract visibility. For organizations managing large vendor portfolios, evergreen contracts that are no longer delivering value can accumulate quietly and significantly over time.
In Practice A company signed a software subscription three years ago that has been auto-renewing annually ever since. The original champion who selected the tool left the company two years ago and the software is no longer actively used. Nobody on the current team knows the contract exists. When the annual renewal triggers another $18,000 charge, the finance team investigates and discovers the agreement has been renewing unnoticed for two years. A contract intelligence platform with renewal alerts would have flagged the upcoming renewal window and given the team the opportunity to cancel before the charge occurred.