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Renewal Of Agreement Clause

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As a general rule, the EULAs are effective until termination and grant the licensee a permanent right to use the Software. Agreements rarely define the respective version of the software. However, it may be preferable to grant a permanent license to a given version, to set the rights for subsequent updates and maintenance packages, and the price of those versions. If the agreement contains the right of extension, make sure that the terms of renewal are clearly defined. Another important economic aspect of the clause is its impact on the profitability of the company. [1] The termination of the contract can have a negative impact on a company`s revenues that management can cover by increasing the cost of terminating the contract to consumers. [8] In accordance with traditional economic theory, a rational economic operator would opt for the economically superior alternative which, in this case, would be an extension of the contract. [1] [9] Contracts, including car renewal clauses, may be terminated due to infringements, mutual agreement between the parties and certain special circumstances. [2] The clause applies to “business to consumer,” business to business and business to government leases. [17] [18] The term clause often contains an option for extension. Others, for example. B an end-user license agreement, may simply provide an indeterminate period, with both parties having the right to terminate the contract under defined conditions. An automatic renewal clause (also known as a persistent clause) is activated towards the end of the term of the contract, automatically extending the terms of the contract, unless the contract is terminated (by mutual agreement or infringement) or one of the contracting parties has sent a contract conclusion to third parties before the expiry of the deadline.

[1] [2] An example of the clause is presented in the following quotation: “Any term is automatically renewed for later periods of the same duration as the original term, unless one of the parties gives the other termination in writing at least thirty (30) days before the expiry of the current period.” [4] As a result, companies should ensure that existing and new service contracts contain automatic renewal clauses and, if service contracts do contain these clauses, ensure that there are appropriate notification procedures in place to remind you of important renewal dates. Similarly, certain obligations should be maintained after the end of the agreement, in line with the main objective of the agreement. This is addressed in the survival clause, which explains what obligations “survive” at the end of the agreement and for how long. For example, it is customary for confidentiality obligations to survive at the end of an agreement.