According to the above theory, economic operators would take into account the costs of contract renewal, (new) negotiation and termination prior to the decision-making process. Any change in the terms of the contract may result in higher “transaction costs” than the renewal of the same contractual terms. The fact remains that there are costs in both situations. However, the contracts no longer apply at the end of the term of the contract, so there are no costs associated with termination of the contract. [1] Evergreen clauses can be used in various types of contracts, including staff stock options plans, dividend reinvestment plans (DRIPs), leases, guaranteed investment certificates (ICG), health plans, insurance coverage policies, periodic subscriptions and revolving credits. Most still-green contracts are concluded with an extension period of 60 to 90 days before being renewed. The applicability of the automatic extension clause varies from country to country. The parties can renegotiate or amend the legal agreement. This could be done by terminating the current contract and developing a new treaty with the renegotiated commitments. If a party did not comply with its contractual obligations, the contract would be terminated independently of the clause and, in some cases, compensation and comparisons may be due.

It should be noted, however, that some countries have legislation that regulates the duration of the offence under which the contractual relationship can be cancelled. [1] Finally, contracts may also be terminated due to certain circumstances in areas such as public health. [2] Evergreen contracts can be terminated in different ways. They can be completed in the same way as they are designed – by the form of agreement between the parties involved. If the parties wish to make changes to the original agreement, they can develop a new contract that defines its changes. This new treaty is extinguished from the original one. The other option may be that one party is not late in the agreement. Although this is an undesirable decision, the contract is still invalidated. 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] An automatic extension clause generally resembles this: while an always green clause provides comfort to each party because it does not have to renegotiate the terms of the contract on the expiry date, a party may feel blocked and dissatisfied.