Final answer:
An automatic renewal clause should be included in a contract when the parties involved anticipate the need for continued services or relationship beyond the initial term of the contract. It provides convenience and allows for uninterrupted services while still maintaining the option to terminate if desired.
Step-by-step explanation:
An automatic renewal clause should be included in a contract when the parties involved anticipate the need for continued services or relationship beyond the initial term of the contract. This clause allows the contract to renew automatically without the need for explicit agreement from both parties. It is commonly used in subscription-based services, such as gym memberships or software licenses.
For example, a software company may include an automatic renewal clause in their licensing contracts to ensure that the customer can continue using the software without interruption. If the customer does not wish to renew, they would need to provide notice to the company before the renewal date.
By including an automatic renewal clause, both parties can benefit from the convenience of uninterrupted services while still maintaining the option to terminate the contract if desired.