There comes a time when every contract will come to an end; however, what happens when the parties don’t want that to happen but there are no provisions in the contract dealing with extension rights? In this blog we analyze good practices in relation to extending contracts where there is no express right of extension.
Old Contract or New Contract
Consider whether the intention of the parties is merely an extension of the period under which the current terms are to continue or whether, in addition to an extension of such period, the parties intend to make other changes to the contract. If the circumstances point to the latter, parties should consider whether a new contract is more appropriate. Some considerations for moving to a new contract may include updates to pricing or other business terms, a reset of any liability caps or accrued rights under the current contract, and a clear delineation between liabilities under the current contract and those under the new contract.