How to Write a Contract Extension Letter
Knowing how to write a contract extension letter is essential when extending the duration of the existing contract.3 min read
Updated August 17, 2020:
Knowing how to write a contract extension letter is essential when extending the duration of the existing contract. A contract extension agreement removes the need to write a new contract. All that is needed is a modification of the terms and end date of the original contract.
When to Use a Contract Extension Agreement
Once the contract extension is approved by the contracting parties, you can move to maintain the terms of the existing contract. A contract extension agreement is used:
- If the contracting parties want to make changes to the terms of a contract and set a new date of termination.
- When a contract is ending and the contracting parties want to extend the end date of the original contract.
- When an employer and employee are satisfied with the employment contract terms and wish to extend.
Details of a Contract Extension Agreement
A contract extension agreement is also referred to as an extension of a contract agreement or a contract extension letter. When drawing up employment agreements, the start and completion dates of the contract are clearly indicated. This is because employment agreements span over a fixed period. Sometimes, however, the work may not be completed within the projected time period. In such cases, the rights of both parties stated in the original contract must be adhered to, necessitating the drafting of a contract extension agreement.
A contract extension agreement must contain:
- Names, addresses, and signatures of the contracting parties.
- Name, start date, and end date of the original contract.
- End date of the extension period.
- Changes to the contract including addition, removal, and deletion of the terms agreed upon in the original contract.
You may also attach the original contract to the extension agreement.
How to Craft an Appropriate Extension Letter
To craft an appropriate extension letter, you will need to know the elements to be modified in the original contract. These may include:
- Duration and terms of renewal. In some cases, the duration of the contract may have been too short or too long.
- Responsibilities. There may be an increase or decrease in daily activities and responsibilities, causing you to consider altering the terms of the contract.
- Goals and objectives. There may be changes to the objectives and goals of the contracting party, making the terms negotiated during the crafting of the original contract irrelevant or inapplicable.
- Terms. An increase or decrease in responsibilities and workload may require adjustment to the compensation package stipulated in the contract.
- Title. If your role within the organization has changed, the title designated to you in the contract should be altered.
- Oversight responsibilities. If the terms of the contract aren't in line with the actual day-to-day activities expected of you, you may consider changing the terms of the contract to reflect this. For instance, the travel schedule anticipated in the contract is unrealistic. If you're traveling more than expected, you may wish to seek additional compensation.
The Goal of a Contract Extension Letter
The major aim of a contract extension letter is to extend the tenure of a contract past its end date. If an employment contract ends because a service has been completed or the specified employment time frame has expired, the employer will draw up a contract extension agreement to extend the contract and inform the employee of the extension.
Contract extensions are usually written by employers to exceptional employees and should state the reasons for granting the extension.
When crafting an extension agreement letter, you should thoroughly read the fine print, relevant details, and terms and conditions of the original contract. It's important to note elements that are outdated and should be modified or removed entirely. Once the current contract has been thoroughly reviewed, you can go ahead to draw up the letter for contract renewal.
The letter should speak to the aspects of the original contract that you want to discuss or debate. In today's business environment, emails are often used instead of letters since they are faster and constitute proof of receipt.
Copies of the contract extension agreement should be sent to HR and other relevant departments. This ensures continuity and saves time, energy, and resources.
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