Extend the Contract: Everything You Need to Know
To extend the contract you have with a client, contractor, or vendor is an easy way to continue a business relationship that is working well for all involved.3 min read
To extend the contract you have with a client, contractor, or vendor can be a great and easy way to continue a business relationship that is working well for all involved. This is where a contract extension agreement may come in, also known as a contract extension letter or an extension of contract agreement.
Fortunately, you do not even need to worry about drafting an entire new contract; rather, you can simply take the original contract that is in place change the date and have all of the involved parties sign. Once that has been done, you are free to continue on with the contract.
The two primary reasons why you could implement a contract extension agreement include:
- The involved parties would like to continue the working relationship beyond the initial end date of the contract
- The involved parties want to make some changes to the terms and conditions of the original contract, including extending the end date
Should you choose to implement a contract extension agreement, you will want to be mindful to include the following key points:
- The date of which the extension agreement becomes effective
- Names and contact information of the parties involved in the contract
- Date of the original contract
- End date of the original contract
- The new end date/end date of the extension
- Any changes that are being made to the original contract beyond just that of the new end date
Fortunately, it is quite easy to find any number templates for a contract extension agreement, wherein you will only need to plug in the appropriate information. Should you prefer to draft your own contract extension agreement, rather than using an online template, you can either consult an attorney with a background in contract law or find examples of such language online. The former would be advisable, however.
It is generally considered best practices to keep the original contract with the new one (often stapled or otherwise attached), so it is easy to then see and compare those changes.
Renewing Versus Extending
On the surface, it may seem like renewing a contract is the same thing as extending it, much like it may seem pretty cut and dry as to how a contract is terminated.
With terminating a contract, typically one of two things happens: the contract expires and is completed, or it is terminated with or without cause, by one or all of the involved parties.
When it comes to renewing a contract, the original contract may provide language regarding the option of a renewal. More often than not, it is all fairly cut and dry, but issues can sometimes arise if there are conflicts that extend past the point of the contract termination. For example, you may complete a task for a client by the agreed upon date, thus ending the contract, but if the client is not providing you with the agreed upon payment, then they could be in breach of contract.
But, what happens if, prior to the payment due date, you entered into another agreement with the client, accounting for the fact that the original contract contained language to the effect of “may be renewed?” Is this seen as an entirely new contract or as an extension of the original one? Ultimately, it may come down to how the contract was written and the utilization of the word “renew” and how it may be defined (if at all) throughout the contract.
In such cases, courts have recognized the ambiguity of the word “renew” in a contractual context, as the word may have various meanings. There are two common definitions as it pertains to contract law:
- Re-creation of legal relationship, or replacing an existing contract with a new one, which does not include the extension of the original contract
- A contract for an additional time period, keeping with the original terms and conditions, not placing on any party, new or additional expectations or responsibilities
Given these common definitions, courts have recognized that the word “renew” could include either of those above scenarios. As such, when drafting a contract, it is important, should the idea of a renewal be offered in the contract, that it is used consistently throughout, and even provide an addendum that defines clearly the expectation of the idea of a renewal. Additionally, that consistency should include not using another word at points in the contract, in place of renewal.
If you need help with contract extension agreements, 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.