SaaS contract renewal: tacit vs express and best practices

Renewing a SaaS contract may seem straightforward, but it often comes with surprises. A poorly drafted provision or insufficient vigilance can lead to unexpected costs or unwanted renewal. The vendor typically favours tacit renewal to stabilise recurring revenue and avoid service interruptions, while the customer seeks to retain control over its commitment — particularly by using an addendum or renewal order form to adjust the contractual terms. Here are the key points to watch to avoid pitfalls and protect your interests.

Tacit renewal: watch out for the traps

Many SaaS agreements provide for automatic renewal at the end of the initial term. This avoids service interruptions, but can also commit the customer to a new period without explicit consent — creating a budgetary risk if the renewal was not anticipated.

For the customer, verify:

• The notice period for opposing renewal. Some agreements require notice several months before the expiry date.
• The pricing terms after renewal. An automatic price increase may be provided for.
• Contractual changes. The vendor may unilaterally modify certain terms.

For the vendor, anticipate:

• Contractual and legal obligations to inform the customer before renewal.
• Where relevant, the alternatives to propose (flexible renewal, exit options, service adjustments).

Express renewal: how does it work?

Some agreements provide for renewal formalised by an addendum or a renewal order form. This approach allows the parties to adapt the contractual terms and avoid ambiguity.

For both parties, the following should be addressed:

• A clear list of changes to the agreement.
• Detailed tracking of the commitments made, particularly regarding term and pricing.
• Formal validation of the new terms by addendum.

The parties may also agree to meet a few months before renewal to discuss these terms and avoid a rushed or emergency renewal.

How to secure your SaaS renewal

For the customer:

• Review every provision of the agreement well in advance of the expiry date to identify potential changes.
• Set up reminders to respect the deadlines for termination or renegotiation.
• Request a clear and detailed addendum if the renewal involves contractual changes.

For the vendor:

• Send advance notifications to remind customers of renewal deadlines and terms.
• Provide a detailed order form specifying the updated terms.
• Facilitate renegotiation by scheduling a formal discussion before the expiry date.
• Ensure that the new terms are validated in writing to avoid any dispute.

For an overview of the key provisions in a SaaS agreement, see the SaaS contracting guide.

Conclusion

Renewal is the moment when contractual imbalances become visible. It is also the best opportunity to address them. If you need to audit your renewal provisions or prepare a renegotiation, book a call.

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