What is an evergreen contract?

An evergreen contract is a type of contract that renews automatically on a regular basis until one party decides to terminate it. This type of contract is often used in industries where the services provided are ongoing or where there is a continuing relationship between the parties involved.

The term "evergreen" refers to the fact that the contract is always in effect and renews indefinitely, much like the leaves of an evergreen tree that never fall off. Evergreen contracts can be beneficial for both parties as they provide a stable and reliable relationship. However, they can also be risky if one party wants to terminate the contract and is unable to do so, as they may be locked into a long-term commitment.

It is important to carefully review and negotiate the terms of an evergreen contract before agreeing to it, as they often contain provisions that can have long-term implications. This includes clauses regarding pricing, renewal timing, and termination clauses. It is recommended that legal counsel is sought before signing an evergreen contract to ensure that the terms are fair and reasonable to all parties involved.