By Ed Heyburn, Palisade Compliance
In the world of IT procurement, vigilance is everything. As software vendors move toward more complex and less transparent licensing models, procurement teams face a growing risk: being locked into automatic contract renewals through so-called evergreen clauses—often buried deep in the fine print or linked externally via a URL.
These clauses can quietly cost businesses millions annually, and across the global economy, the price tag runs into the billions.
What Is an Evergreen Clause?
An evergreen clause is a contract provision that automatically renews the agreement—typically for one year or more—unless one party provides written notice of termination within a specified window, often 30 to 90 days before the contract’s expiration.
In software licensing agreements, this can mean:
- Paying for maintenance on software you no longer use
- Extending support contracts at inflated renewal prices
- Remaining liable for compliance under outdated terms
- Missing the opportunity to renegotiate more favorable conditions
And the kicker? These clauses are often not prominently disclosed. Vendors may bury them in a hyperlink to an online agreement or hide them in a PDF attachment, making it easy for even seasoned procurement professionals to overlook.
The Business Impact
Miss that 60-day window to cancel? You’re locked in—no exceptions.
Evergreen clauses tilt the negotiating power entirely in the vendor’s favor. Companies are left with reduced flexibility and higher long-term costs. Worse, if a software audit is initiated during the renewed term, the company may find itself retroactively responsible for compliance obligations it never intended to accept.
This isn’t just theory. At Palisade Compliance, we’ve worked with Fortune 500 companies who’ve lost tens of millions of dollars by unknowingly falling victim to these clauses.
Why This Keeps Happening
Software vendors know what they’re doing. Automatic renewals ensure predictable revenue, and confusing or ambiguous notice provisions work in their favor. Many procurement teams are stretched thin, reviewing dozens of contracts on tight timelines, often under the assumption that a one-year deal is just that—a single year.
But when “termination” means tracking an obscure clause buried in a 90-page agreement or a third-party URL, the default is inertia—and vendors count on it.
How Palisade Compliance Can Help
At Palisade Compliance, we specialize in helping organizations take control of their software licensing terms—before and after contracts are signed. Here’s how:
- Contract Reviews: We identify evergreen clauses and other high-risk provisions buried in the fine print or external links.
- Negotiation Strategy: We help you push back on auto-renewal terms and structure contracts that require mutual agreement to renew, not just vendor fiat.
- Compliance Protection: Our team of former Oracle and other vendor insiders helps ensure your obligations don’t inadvertently extend through an unwanted renewal.
- Calendar Management Support: We help you set up systems to track cancellation windows—so you’re never caught off guard.
Best Practices to Protect Your Organization
- Read the Linked Terms: If the contract references a URL, read every line.
- Track Cancellation Windows: Set reminders well in advance of the notice date.
- Negotiate Mutual Renewals: Remove auto-renewals entirely or tie them to explicit mutual consent.
- Cap Price Increases: If renewals are inevitable, lock in a maximum rate increase.
- Get Expert Help: You don’t have to navigate this alone.
Conclusion
Evergreen clauses are not inherently illegal—but when buried in fine print or obscured by digital sleight-of-hand, they become a trap for the unwary. Don’t let your organization become another cautionary tale.
If you’re unsure whether evergreen clauses are embedded in your software contracts—or if you’re already feeling the sting of a renewal you didn’t intend—Palisade Compliance can help. Reach out today and take the first step toward regaining control of your licensing agreements.
About the Author:
Ed Heyburn is a Sales Development Representative at Palisade Compliance, where he works with IT procurement professionals and legal teams to reduce costs, manage compliance risks, and regain leverage in software negotiations.
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