Contract Extension Template: Everything You Need to Know
A contract extension template can be a necessary tool for businesses looking to continue a current contract they may have with a supplier or vendor.3 min read
2. Comb Your Contract
A contract extension template can be a necessary tool for businesses looking to continue a current contract they may have with a supplier or vendor. It is estimated that an organization will average between 20,000 and 40,000 contracts. This high number means that both contract managers and sales managers have a lot to deal with opening new deals and handling contracts. Even when a contract is signed, the parties may need to make changes if it becomes impossible to complete the contract successfully in the contract's stated time period.
When the relationship is going well and you would like to continue the contract with a specific supplier or vendor, you may want to extend the contract, and having a contract extension template will make that significantly easier. Additionally, if the parties' needs increase, they can extend a contract to new parameters. To extend a contract, both parties will need to agree to the terms and sign the new documents.
You also may want to use an extension to be able to extend time frames that seemed reasonable at the beginning of the contract but have become unworkable. A written extension can help:
- Avoid misunderstanding
- Minimize confusion
- Reduce errors
- Set forth expectations and obligations
Once an extension is in place, the contract can continue to move forward. You may also see the term "contract extension" interchangeable with:
- Contract extension letter
- Extension of contract agreement
Dos & Don'ts Checklist
There are some important dos and don'ts that you will want to make sure to follow when creating your contract extension template.
- Create reminders before the renewal period is closed to give you the time to construct the contract and the new parameters. Set the reminder at least 30 days before the auto-renewal period begins.
- Before drafting the extension, decide on and write down all of the reasons and goals that you have for the extension. Try to get in your revisions without causing confusion with the original agreement. Also, make sure to clarify all the terms before you write them down.
- Make sure that shareholders are aware of all contract changes. You can keep everyone updated by having shareholders from both parties review both the original contract and contract extension.
- Make sure all parties review and agree to all the relevant details.
- Shoot for over-inclusive instead of under-inclusive.
- Do not assume any expectations; make sure they are all clearly written in the agreement.
- It is important to remember that the new document is just an extension and the current contract is in effect and needs to be fulfilled until the terms of the extension are agreed upon and signed.
- Information that is related to the contract should be forwarded to any other necessary departments such as Legal and Finance. Your legal department will evaluate the contract for any risks, and the financial department will need to review the costs associated with the contract.
- If any of the original contract's numbers or language have been adjusted, make sure they are clear and understandable to both parties.
- When key changes have been made during the renewal review, they need to be reflected in the extension contracts and be consistent throughout.
- Record all the changes that were made and who was responsible for implementing those changes.
- Be sure to include the dates for the next contract review period.
- Sign the extension; keep one copy with you and give one copy to the other party.
- Keep your copy of the extension along with your copies of the original contract.
- Remember that once you have created your extension, it goes into effect and should be treated as part of the original agreement immediately.
- You should have the final copy of your contract extension witnessed and notarized to prevent later challenges in the validity of the signature.
- It is best to contact an attorney to allow them to help you draft a document to meet your specific needs,
Comb Your Contract
You should always give your contract a once-over before completion and verify certain aspects to make sure they fit in with the goals and are reasonable.
- Are the new terms long enough for the obligations and goals set forth to be completed?
- Have the responsibilities increased, decreased, or stayed the same?
- Are the previous goals still applicable?
If you need help with a contract extension template, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.