Stuck in a Bad Deal - Forcing a Contract Reset

A common mechanism for duration in SaaS contracts is to have an initial term followed by an auto renewal mechanism. The auto renewal has a mutual opt-out: i.e. both buyer and seller have the ability to bring the contract to an end by giving notice that they don’t want to renew.

From the seller’s perspective, the ability to exit the auto renew is a key element because, if it’s not there, you’re stuck with that contract for a potentially indefinite duration.

Indefinite duration is manageable if your contract is perfectly drafted so that your margin stays the same, or even increases, over the life of the contract, but a perfectly drafted contract is a rare beast. Usually what happens is the opposite: your margin degrades until you are desperate to get out of the contract.

If you are lucky, you will have a reasonable buyer that will let you reset the contract so that it’s back to a sensible position.

If you are unlucky, the buyer won’t let you reset. At that point, what do you do?

Your best option (and often your only option) is to go through the contract with a fine-toothed comb and find every possible lever of change (however small), and find every potential ambiguity (however minor) and interpret in your favour. Collect them all together, and send the buyer a formal contract notice that you are now applying them all.

At that point, you are likely to go into some kind of dispute with the buyer. But, as a general rule (the general rule in proto-litigation being “who dares wins”) you will end up in a better position than where you started.

25th November 2025