Contract Extension Agreement

Contracts don't last forever. Eventually, the end date of your standard contract will come up. Simple contract extensions typically continue an existing contract. 

Contracts have a fixed term, so when the terms of the contract are about to expire either the contract ends its term and ceases to exist or a new contract is signed. Another option is to extend a contract. Both parties may benefit from this option if they cannot meet their performance obligations on time.

What Is a Contract Extension Agreement?

In an extension agreement, the parties decide to extend the original contract's end date. These are given out when the original parties are pleased with the original contract's terms and conditions, or if they agree that a longer contract is necessary to complete the work.

There are many advantages to negotiating an extension agreement compared to negotiating a new contract. An extension agreement may include the termination date, as well as other small changes to the original contract. In addition to the date of the extension agreement, the parties names and addresses, the original contract details, and any amendments to the original contract should be included in the extension agreement.

Who Needs an Extension of Contract Agreement?

There are many reasons why parties may want to extend their contract in the first place. 

One of the most common reasons to extend a contract is a successful commercial relationship with both parties satisfied with its terms. A contract extension can be used to extend the contract for a shorter duration rather than renewing it for a long time. 

When a commercial relationship isn't running smoothly, contract extensions can also be useful. It is likely that a party will have to request a contract extension if they have not been able to meet their obligations and deliverables within the contract's original duration in order to fulfill their promises. For example, if a construction company needs more time to finish the job because they ran into unforeseen obstacles, an extended contract can protect both parties until the work is complete.

What To Include in a Contract Extension Agreement?

All that is required to extend a contract is an extension agreement. This serves as an amendment to the existing contract as long as both parties are willing to extend it.

Rather than writing a whole new contract for extending the existing contract, parties can just specify their desire to extend the existing contract. This should include the following:

• Names and addresses of both contracting parties 
• Existing contract title
• Existing contract start and end dates
• Contract extension period end date (e.g. when the extension ends) 
• Terms that have been added or changed (ie. additional purchase of materials)
• Signatories' signatures (make sure they're authorized)

As with any contract, parties are legally bound by the addition of this additional agreement they create and sign. 

How To Write a Contract Extension Agreement: Easy Steps

You must remember that all contracting parties must vote on whether to extend a contract. As a result, if you wish to extend a contract, you'll have to ask your counterparty for their permission first. All parties will have to sign off on any extension, whether electronically or in person.

The most common way to request a contract extension is to write an email, or extension letter, though the method may vary depending on what type of contract you are seeking to extend and on what basis. Below is a list of what these contract extension request letters should accomplish. 

1. Communicate with stakeholders 

It is important to clearly identify the person you are addressing with your request, just as you should with any letter or email. If you are asking for a contract extension, make sure to address the stakeholders who are authorized to sign off on the extension, as addressing more junior stakeholders may result in pushback or delays. 

2. Evaluate the current relationship

It's best to take note of what both parties have gained from the existing relationship and thank them for their custom or performance so far before diving right in with your request. By doing so, the parties will recognize the value of the relationship and hopefully will be encouraged to extend it in the future. 

3. Describe how you would like it to be extended 

Next, you’ll want to explain clearly that you want to extend the existing contract and what that means. If a contract is extended, it is common to introduce new terms (such as sale pricing or a discount) to amend the contract, so make sure you capture these early on so that you are transparent about your expectations.

4. Decide on a date for the extension

To improve your chances of receiving an extension, you will also want to propose a new date for the contract extension. This should be fair, specific, and reasonable. In the event that you are seeking to extend an agreement for a lengthy period of time, the counterparty may be reluctant to accept your request. 

There's no guarantee that the date you suggest will be the final extension date, but it's a great place to start and can always be discussed.

5. Give them a thank you and outline the next steps

As a final step in your contract extension letter, thank the contract parties for their time and consideration once you have established the proposed terms of the contract extension, and outline some next steps for them to follow.

Sample Contract Extension Agreement Template (PDF File)

You can download our printable contract extension agreement example or blank contract extension addendum template and open it in PDF format to edit, or use as is. If you have questions regarding our contract extension agreement form, consult licensed attorneys or check your local governing state laws.