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32+ SAMPLE Contract Extension Agreement
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What Is a Contract Extension Agreement?
A contract extension agreement is what you need to extend the duration of an ongoing contract. And according to Rocket Lawyer, it is mostly used to continue a business relationship beyond the contract end date or if parties want a new closing date while adding a few changes to the contract. So you need not create new long contract agreements because only a few alterations in the closing date and specific terms are changed. Nonetheless, all parties involved in the original contract should sign the contract extension agreement so its details will take effect.
Rocket Lawyer said that contract extension agreements are used if a contract’s end date is getting near whereas extension is necessary or if parties require a new termination date while implementing other key changes to the contract.
Why Are Contract Extension Agreements Necessary?
Clearly, contract extension agreements are as basic as extending the duration of an existing contract. But why else is it important? Here are some examples that prove just how essential a contract extension agreement is:
Helps Different Purposes Where Extension Is Needed
The need for a contract extension is not one-dimensional. For example, extending a contract helps when a construction project nearing its deadline actually needs more time to complete, a work-from-home agreement made employees more productive so the working arrangement can be extended, and so much more. So be sure to clarify your contract extension’s purpose in which it is deemed necessary that you only extend. Otherwise, extending could be a burden to some such as continuing one’s lease agreement yet the other party could no longer secure payments.
Gives Room for New Terms and Conditions
Just because an existing binding contract is extended does not mean there is no room for changes. Besides the end date of a contract, you can also set new terms and conditions. As much as possible, these new additions to the contract should improve the contract rather than make it worse. For example, you take out a condition that has become a problem in the previous contract so simply delete that clause in the contract extension agreement. Hence, there is room to add, delete, and alter the contract’s details.
Initiates Mutual Expectations
Bear in mind that in the changes made to the contract extension agreement, mutual expectations must be observed. That is why all parties involved should take time to read and review the details of a contract to be wary of what has been maintained or changed. And it is only if all parties agree to the contract that they will sign it anyway. If both parties realized a mutual mistake from how a home construction work contract took longer to fulfill than what was planned, for example, then adjustments are made possible thanks to contract extension agreements.
Involves a Legally Binding Agreement
Rather than just believing that a contract is extended through word of mouth, a legally binding agreement such as a written contract extension agreement is much more credible. Don’t simply believe in spoken promises since writing them down is much better for proof. So if parties wish to increase the duration of a contract, write everything down in a contract extension agreement and have them signed. That way, the document used as the agreement will be solid evidence in case things lead to court.
Key Elements of a Contract Extension Agreement
A contract extension agreement contains the standard elements you would expect in any contract or agreement. However, there are a few exceptions such as using the same details coming from the original contract and adding new information. So without further ado, here are the needed elements to complete your contract extension agreement:
Three Basic Options of Contract Extensions
In case you need ideas on how to execute a contract extension to an ongoing contract, you actually have three options:
Contract Extension Agreement
Of course, a contract extension agreement is the right way to go when it comes to extending the duration of any original contract. And the simple way to do this is by keeping the same terms coming from the original contract agreement.
Modified Contract Extension Agreement
Whenever you change some terms, provisions, and amendments from the ongoing contract and apply those alterations in the contract extension agreement, you are already going for a modified contract extension agreement. This option does more than just change the contract’s closing date because rules, conditions, and related details are being modified.
Brand New Contract
Although making a new contract means you go for a longer and more complicated process, it can still be an option especially if lots of modifications are expected in the agreement. Lots of new rules would mean you are already making a new contract. And you can simply talk about the contract extension in one of your new contract’s clauses instead. Others often make a contract extension as an addendum to contract.
How to Make a Contract Extension Agreement
Albeit the contract extension agreement’s definition and importance are easy to understand, it is still possible that you might have a hard time writing every single detail, especially for first-timers. But not to worry because you can simply refer to these steps below on how to create contract extension agreements flawlessly:
Step 1: Mark the Contract Extension’s Purpose and Reasons
First things first, clarify the reasons and purpose behind the need to make a contract extension. An official statement of purpose helps in explaining the main points behind extending a contract’s duration rather than ending it. And it is helpful to be aware ahead that all parties involved are in favor of the extension and that they know what details are at stake in continuing a contract. Whether the concern is to extend a purchase agreement, rental agreement, annual employee work agreement, or any contract at all, you won’t have a hard time filling in the details of your contract extension agreement when your purpose is crystal clear.
Step 2: Figure Out What Provisions Should Be Retained, Deleted, or Altered
Remember that just because a contract is extended, it does not always mean that the amendments, terms, conditions, provisions, or clauses in the contract remain the same. So review what needs to be maintained, deleted, or changed as those mark a big impression in the final output. Maybe a new purchase agreement now has bigger shipping costs due to inflation or that one clause from the original lease agreement is now absent as it posed a problem before. And be sure to highlight the alterations for both parties’ awareness. There is still time to change them whenever a disagreement takes place.
Step 3: Use a Sample Contract Extension Agreement Template as Your Guide
The easiest approach to creating contract extension agreements is when you no longer write them from scratch. Simply use our collection of free ready-made sample contract extension agreement templates. Each sample gives you the standard guide of what a proper contract extension agreement looks like. And the best part is you can edit the details inside to make it your own. You can even choose from loads of examples such as a sample employment contract extension template, sample contract extension letter, and more.
Step 4: Incorporate the Rest of the Contract Extension Agreement’s Elements
To complete your contract extension agreement, don’t forget to insert the recently discussed elements of a contract extension agreement. From the title, effective date, down to the signature of parties and attachments, these parts are what makes a total contract extension agreement document. But you can also add more components besides the standard examples as long as they are needed or relevant to the contract. If not, then take them out. And only submit the contract when you are done fact-checking the details.
What are the other names of a contract extension agreement?
A contract extension agreement can also be referred to as an extension of contract agreement, contract extension letter, or simply an extension agreement.
How can a contract extension agreement be accomplished?
You can achieve a contract extension agreement by (1) a contract extension letter signed by all parties involved, (2) an exchange of letters among parties starting from a contract extension request letter down to an acceptance letter, and (3) a signed contract extension agreement.
What is the difference between a contract renewal and a contract extension?
Although many people consider contract renewals and contract extensions as synonymous, there is a slight difference. A contract extension is merely for extending or lengthening the amount of time given to an existing contract. Contract renewal is already as good as a new contract. So if a purchase agreement expires, the renewal is like a second purchase agreement already.
Sometimes, you need not wait for business contracts to end if things are going so well in the first place. Just as the saying “just keep swimming” goes in Finding Nemo, don’t give up and keep moving forward. And rather than making a whole new agreement, you can just change the closing date and finalize the extension period using a sample contract extension agreement template. Create a contract extension agreement now!