A rolling contract, also known as an evergreen contract, is a type of agreement that is automatically renewed at the end of a specific period without the need for renegotiation. In legal terms, it is a contract that does not have a fixed end date, but instead, continues to renew until either party cancels it.
The legal definition of a rolling contract can vary depending on the jurisdiction and the type of contract. In general, a rolling contract is an agreement that allows for ongoing performance of the contract`s terms and conditions. This means that the contract automatically renews at the end of each term, usually for the same period as the original agreement, unless one of the parties provides notice to terminate the agreement.
Rolling contracts are often used for services such as insurance, telecommunications, and software licensing, where it is beneficial for both parties to have an ongoing relationship that does not require constant negotiation. These contracts can be beneficial for businesses as they provide a certain level of predictability and stability in terms of revenue and expenses.
However, if not carefully managed, rolling contracts can also pose risks to businesses. If the contract terms are not reviewed and updated regularly, it can result in a situation where one party is locked into unfavorable terms without the ability to renegotiate. To avoid these risks, it is important for businesses to regularly review and renegotiate their rolling contracts to ensure that the terms remain fair and beneficial to both parties.
In conclusion, a rolling contract is a type of agreement that automatically renews at the end of a specific period without the need for renegotiation. It is an ongoing performance of the contract`s terms and conditions. Businesses should be careful when entering into rolling contracts and ensure that the terms are regularly reviewed and renegotiated to avoid unfavorable situations.