One of the things I deal with on a regular basis are contracts that auto-renew. So for example an academy trust enters into a services contract that looks like it's set up to run for two years. However buried in the terms and conditions is some drafting that says unless the client takes some specified proactive actions, then rather than come to an end after those two years the contract will automatically roll-over and the term will be extended - sometimes by a year, sometimes by more. (The 'worst' example I've seen was a contact that was auto-extended by an additional five years).

I always advise against entering into any contract that contains such a provision if at all possible. If you're appointing a provider on the basis of a two year term, then if the term is to be extended it should require you to take a pro-active step to do so. Far too many clients come to see me because they have inadvertently found themselves in the scenario where a contract they don't want has now been extended and they are liable for another year or more of charges. If there is not a problem with the service being provided, often there is little that can be done.

However if you have any of these contracts in place, (the education sector is one of the few where these types of provision are still common), there are steps you should take …

A typical clause reads along the lines of: "the Contract shall run until the Expiry Date following which, unless terminated by either party in accordance with this clause, it will extend for consecutive periods each equal to the length of the Initial Term (an Extension Term). Either party may terminate the Contract by giving at least 90 days prior written notice of termination to the other party, such notice to expire at the end of the Initial Term or an Extension Term".

• You can set a reminder to ensure that you are notified in sufficient time to serve a termination notice, so in the scenario above you might want to be reminded 120 days in advance of the Expiry Date so that if you want to terminate it you can do so. A good tip is not to leave it so that you are right up to the deadline. As a rule of thumb serve the notice at least two weeks before you have to.
• Alternatively, you can serve notice at any point - you don't need to wait until 90 days before the Expiry Date. So you can serve a notice terminating the contract on the very first day, with the termination taking effect on the Expiry Date. If you do this, make sure you keep a copy of notice so that it can be found if in two years the provider 'forgets' that you'd terminated in time.
• A contract will often contain a 'notices' clause which sets out how notices need to be served - often by sending a letter by first-class post to the registered office. It is very important you follow the exact process set out - if you don't, for example you send an email to your contact, then there is a good chance the provider may be able to claim you have not served a valid notice of termination and the contract will be deemed to have extended.
• Whichever approach you take, it is always good practice to get the provider to respond confirming that you have validly terminated the contract and it will therefore end on the expected date. This should avoid any risk of dispute.

If you have any questions about contracts that automatically extend, please contact  Matthew Wolton.