In 2019, Mobile Telecommunications Network (MTN) has launched a subscription-based mobile phone service in South Africa. The service was a mobile data rate of 1 Mb, which renewed the automatic charge of consumers “40c per megabyte every time they ran out of data”. Subsequently, it was pointed out that this was simply another form of off-network data usage plan. As a result of consumer reaction, the company was forced to withdraw its data plan. [31] The parties may 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] This agreement is automatically renewed at the end of each term for an additional ten years, unless one of the parties notifies the termination in writing at least 30 days before the expiry of the term in question. 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. 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 contracts are used for a variety of purposes, including leases, sales contracts and service contracts. It has been reported that a number of digital media companies are taking a unique approach to marketing. As a result, consumers are allowed to use the services offered free of charge for a limited period of time. At the end of this period, they are automatically subscribed, unless they are terminated by the consumer. [21] Amazon.com, a U.S. multinational e-commerce company, offers its consumers a variety of online services such as Amazon Prime, Amazon Web Services, Alexa and so on. [22] Amazon Prime is a paid subscription service that provides consumers with exclusive content and services that will be automatically renewed towards the end of the period. [23] A similar business model has been adopted by online audio services companies such as SoundCloud and Apple Music. [24] [25] The automatic extension clause becomes an economically viable option in the event of a renewal of the contract.

In the case of companies that enter into contracts for a period of time, termination of the contract is the most optimal decision that the reasonable consumer will probably make, since the contract itself would no longer exist at no cost. However, companies considering several periods between them and, since contractual terms would apply for all periods, may find that with each termination of the contract, they will have to bear costs to renew the contract. In this situation, companies may therefore find that the automatic renewal clause is the best solution, since contract renewals must not inc afford costs for each period, except for one to terminate the clause. [1] If you fail to agree to remove the automatic renewal clause and there are good reasons to enter into the contract, you should: There are many cases that are decided by the courts of any