signed a SaaS contract last year for $48k/yr. company stopped using the tool 6 months ago. assumed cancellation by non-renewal. got hit with a renewal invoice last week. they're pointing to a clause requiring written notice of non-renewal 90 days before term end — which we missed by 14 days.
is there ANY way out of this?
auto-renewal clauses in B2B contracts are generally enforceable. some states (CA Bus & Prof Code 17602, NY Gen Bus Law 527-a) have notice requirements for consumer auto-renewals but B2B is mostly unprotected.
BUT — many SaaS vendors will negotiate down even when contractually entitled. relationship and reputation matter. propose: pay a discounted "exit fee" of 25-40% to end the relationship cleanly.
also check if they sent the required renewal notice. many MSAs require the VENDOR to give notice of upcoming auto-renewal (often 60 days before). if they didn't, the auto-renewal may be unenforceable.
I'm Sergei Tokmakov, California attorney (Bar #279869). Auto-renewal traps are widespread in SaaS. Three angles to explore:
(1) Did the vendor provide the contractually required pre-renewal notice? Many MSAs require the vendor to notify the customer 60-90 days before renewal. Failure to do so can void the renewal. (2) Was your missed notice a result of email/contact info changes the vendor failed to track? Notice sent to a person who left the company may not constitute proper notice. (3) Is the unilateral $48k for unused service a "penalty" rather than liquidated damages? CA disfavors penalties.
Practically, most vendors will negotiate a 30-50% exit settlement when challenged. A demand letter citing the relevant defenses on attorney letterhead at $575 flat is often the most cost-effective path. Informational only.