Evergreen Clause: Do you know if your contract has one?
- Bonnie Bragdon
- Jun 16
- 1 min read
Introduction:
Evergreen clauses in veterinary diagnostic contracts can be a double-edged sword. They ensure continuity but can also lock clinics into long-term commitments that may not always be beneficial.
What is an Evergreen Clause?
Evergreen clauses are provisions in contracts that automatically renew the agreement unless one party takes action to terminate it. In veterinary diagnostic contracts, these clauses can impact financial planning, service quality, and flexibility.
What to Watch For:
Automatic Renewal Terms – Look for language that specifies how and when the contract renews.
Termination Notice Requirements – Some contracts require written notice months in advance.
Price Adjustments – Ensure the renewal does not come with unexpected price increases.
Service Commitments – Verify that the provider continues to meet your clinic’s needs.
How to Prepare for Them:
Calendar Alerts – Set reminders for renewal dates to avoid unwanted extensions.
Legal Review – Have an attorney examine the contract before signing.
Negotiation Strategies – Discuss flexible termination clauses before committing.
Pros and Cons of the Vet Clinic:
Pros:
Ensures uninterrupted diagnostic services.
Locks in pricing and service terms.
Reduces the administrative burden of renegotiating contracts.
Cons:
Limits flexibility in switching providers.
Can lead to unexpected financial obligations.
Requires proactive monitoring to avoid automatic renewals.
Exit Strategy:
Understand Termination Clauses – Know the required steps to end the contract.
Negotiate Shorter Renewal Periods – Option for annual reviews instead of multi-year commitments.
Prepare Alternative Providers – Have backup options ready in case termination is necessary.
What to learn more? Here is a good read.
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