Appears to be a bug in the contract module: If you have "Make the 'approver' field as mandatory" unchecked.
1: When you create the 1st contract it works fine and contact is auto approved.
2: When the contract is up for "renewal" you must manually approve the contract even though the " Make the 'approver' field as mandatory" box is unchecked.
Sorry for the delay, we weren't able to reproduce the issue in the staging environment. I will have this converted to Ticket and one of the Support Rep would reach you out for further analysis.