Contract Extension Agreement

“That this peace may last forever,

And our hands be clasped more closely”

– H.W Longfellow, The Song of Hiawatha.

The above lines capture the essence of a document created to extend the status quo in a contract – the contract extension agreement. A contract, by definition, is an agreement enforceable by law. But what if the terms of a contract are so irresistible to both parties that they hardly need any enforcement? This is where contract extension comes into the picture. It implies that the parties are comfortable with the work of one another and trust each other into entering longer commitments in future and better cooperation. In other words, it is the symbol of a win-win situation in a contract.

What Is A Contract Extension Agreement?

A contract extension agreement is a brief document which gives further validity to a contract set in motion by an original agreement. It effectively pushes the termination date further into the future.

It usually does not deviate from the existing terms and conditions which may have otherwise required a fresh agreement. In short, a contract extension agreement is an agreement that gives longer life to the terms and conditions of a contract.

What To Include In A Contract Extension Agreement?

Introduction

The document may begin with an introduction that contains the following details:
Date: The date of entering the extension agreement should be shown.

Parties: The parties who are entering into the agreement should be described including complete names, incorporation details, registered office addresses/address of usual business

For example: ABC Ltd, a company incorporated under the Companies Act, 2013, having registered office at 12, bc street, cd city and XYZ LLP, a limited liability partnership having a regular place of business at 34, ab avenue, xy city.

The Original Contract

The fact that the parties entered into an original contract should be mentioned along with a brief introduction of the purpose and terms of the contract along with the duration and the date of signing it.

Extension

It may be mentioned that the parties mutually agree to extend the terms and conditions of the original agreement in accordance to the terms and conditions given in the extension agreement as well as under the original agreement. Many agreements have detailed clauses as to the terms and conditions of extension of the same.

Ending Date Of Original Contract

It is important to mention the ending date of the original contract separately. This forms one of the most important clauses of the contract extension agreement.

For example: “The contract dated 12/09/2015 is ending on 11/09/2016”

Duration Of The Extended Contract

After mentioning the end date of the original contract, the details of the validity of the extended contract should be made clear. That is for example immediately after the expiry of the original contract for a period of  a specified number months, weeks or days as agreeable.

Binding Of Executors, Assignees, Representatives, Heirs, Etc

The Agreement may be said to bind all legal representatives of the parties apart from the parties themselves. They may be heirs, executors, Assignees among others. This gives an additional guarantee to its fulfilment in case any of the signing parties are not available owing to any circumstances.

Entire Agreement

It can be mentioned that the extension agreement, along with the attached original agreement forms the entire agreement between the parties. There would be no need to draft a fresh agreement in case there is an extension agreement drafted and signed by both the parties.

How To Make It Legally Valid?

A legally valid contract extension agreement may be printed on the official letterhead of one of the parties and signed by both the parties.

The signature may be made conventionally by pen or through electronic medium recognised by the government. For example, electronic signature as identified in the Information Technology Act, 2000.