page_title: Automatic renewal clause
section_title: Miscellaneous
hierarchical_section_title: Automatic renewal clause / Commercial uses / Miscellaneous
caption_attribution_description: English: Rare picture of an empty Gym in Sydney Australia taken by a cleaning company worker on new years day when it was completely empty.
context_page_description: An automatic renewal clause, is activated towards the end of the contractual period whereby it automatically renews the terms of an agreement except when the contract is terminated, or one of the contracting parties has sent a letter of contract cessation to others prior to the end of the period. An example of the clause is illustrated in the following quote: “Each Term shall automatically renew for subsequent periods of the same length as the initial Term unless either party gives the other written notice of termination at least thirty days prior to expiration of the then-current Term."
  Firms that are involved in contracting for multiple years generally use this clause more often when compared to other firms. Also, firms engage in this legal process to gain economic benefits and reduce their costs. Examples of industries in which it is generally used include insurance, digital media, healthcare, telecommunications, fitness, mining and so forth.
  Legal complications of the clause inculcate the advance notice time period, extent of contract transparency and grounds for contract termination. The clause may be unfairly used by businesses for increased revenues and profitability.
context_section_description: Mobile phone services in the telecommunications industry and gym memberships in the fitness industry are also auto-renewed.  
  In 2019, Mobile telecommunications network (MTN) company launched a subscription based mobile phone service in South Africa. The service was a 1MB mobile data plan that renewed automatically charging consumers "40c per megabyte every time they ran out of data" . Following this, it was highlighted that this was simply another form of an Out-of-Bundle Data Usage plan. As a result of the consumer backlash, the company was forced to withdraw its data plan.
   
  Ashbourne Management Services is a UK based company mainly involved in the fitness industry. The company overseas and offers services for the development and management of gym contracts and collection of gym subscription fees. The company was found to renew its long term contracts (usually more than 12 months) with an advance notice of less than a month. Complaints were filed against this practice by two individuals which were deemed as just by the court with the ruling in the favor of the claimants.
caption: Some gyms may renew their long term memberships with an advance notice of less than a month
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