Extending an Agreement That Has Expired

If a contract has expired, you, as an entrepreneur, are exposed to four different risks: Home / Knowledge Base / An expired contract – but no one notices! This could be of concern to service providers where a one-year fixed-term contract may not contain provisions for price revision or price scaling. A recipient of services could also be affected if the expired contract relates to the exclusive provision of services. This may have an additional impact on companies or public bodies that have made commitments or have other obligations to submit new tenders. It is therefore important to make it clear on what basis the ongoing work is to take place. If the original contract has been renewed (or if there is a new contract under the same conditions), the termination provisions of the original contract may apply to the extent possible and to the extent consistent with the other terms and conduct of the parties. However, since the original term has expired, the most likely outcome is that the court implies a clause that the contract is considered continuous, subject to a right to timely termination. Regarding the issue of the risk of protest, other companies may complain that, thanks to a contract change that has expired, they have not had a fair chance to compete for the work that remains with the original company. They can claim that a deadline has been set for the contract and that at the end of this period they should have the right to receive the work in the future. An expired contract means that there are no documents that need to be modified or extended. An auditor could therefore argue that the public body did not follow the right channels for the work in progress. If an agency were to assume that an expired contract could lead to changes, it would never be obliged to tender. Whether a court decides that the entire expired contract has been renewed or that only some of the old conditions apply depends on the facts. If there have been no disputes over certain conditions in the period after expiration, the entire original agreement may apply.

Upon the expiry of its original contract, BSG sued CheckVelocity, claiming that CheckVelocity`s failure to pay the fees allegedly due under the survival provision of its previous contract constituted a breach. The contract provided that the payment of a referral fee referred to in the contract as the “balance of fees” would survive the termination of the agreement and would continue “until the expiry of the contracts with the clients, as they could have been extended”. In such a recent case, the counterparty questioned whether this was possible and instead submitted a recital stating that the old agreement had continued with a new expiry date. That seemed to me to be wrong for the reasons you mentioned in retroactivity or anti-dating situations. Personally, I didn`t see anything wrong with creating a change that revived the dead contract , but I`m willing to consider alternatives other than lying or writing the original deal from scratch. It is the behavior of the parties (objectively and with regard to its consistency with the terms of the old contract) that is the key to determining which of these three will be the result. A few examples from the cases help illustrate different results. If your contract contained a clause allowing an extension, this renewal option must be exercised before the end of the initial term.

You must obtain a written agreement on this extension. The fastest way to do this is to draft a simple document that relates to all the terms of the existing agreement. Then, as if you were writing a change, change the terms that need to be changed and make any additions or deletions that both parties agree to. The court concluded that the contract was ambiguous because of the parties` use of the word “renewed”. The Court concluded that the term “renewal” has several meanings. The extension involves “the restoration of a legal relationship or the replacement of an old contract with a new contract as opposed to the mere renewal of a previous relationship or a previous contract” (i.e. an entirely new contract) and also includes “a contract for an additional period with the same conditions and obligations as a previous contract and does not confer new obligations or rights”. The Court therefore concluded that the phrase “how they may be renewed” could be ambiguous, since it can be understood as including both an entirely new contract and an extension of contract. In Bullock v The Wimmera Fellmongery and Woolscouring Co Ltd (1879) 5 V.L.R. L) 362, an appointment scheduled for only one year and then at the option of the shareholders, lasted continuously for 15 months before a notice of termination was issued.

It is important to follow the correct modification procedure set out in the terms of the contract when agreeing on an extension. If the correct procedure is not followed, the parties may not be enforceable. On the contrary, they could only modify contracts that had expired before. The longer it has been since a contract expired, the more difficult it would be for a public body to revive it. It would be more difficult to support the revival of a treaty that expired three months ago than the resumption of a treaty that expired a few days ago. There comes a time when each contract ends; However, what if the parties do not want that to happen, but there are no provisions in the contract that deal with renewal rights? In this blog, we analyze best practices regarding the renewal of contracts where there is no explicit right to renew. If they continue to fulfil the subject matter of an expired contract, there are three possible legal outcomes: for example, in a Scottish case at first instance, the court found that the reasonably distanced observer, by reason of his conduct and in the absence of talks, would almost inevitably have assumed that the parties would continue to do business, to the extent possible under their expired franchise agreement; SJD Group Ltd v KJM (Scotland) Ltd [2010]. Reviving an expired contract is legally a tricky issue. If a contract has expired, it means that no extension clause has been incorporated. The only parts of a contract that persist after a contract expires are what the parties have agreed to continue. .