Sample wording of a renewal agreement for beginners

The term “extension” is used both in business relationships and in everyday life. You can extend the supply contract, or you can extend the energy supply contract. However, the methods of prolongation in these cases will be different. So what does it mean to “roll over” and in what ways can this be done?

Let's get ahead of ourselves, since we have already touched upon the issue of prolongation of the energy supply contract. This is a contract that will continue unless you or the supplier cancels it. This rule is established by the legislator.

If your supplier suddenly decides to unilaterally stop the supply of water, gas, or electricity due to the expiration of the contract, this gives you every right to go to court.

As part of the energy supply contract, you are a consumer of services, which means that all consumer protection legislation is on your side. If you are planning to defend your rights, be sure to seek the help of a specialist in these matters.

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What is extension?

In general, prolongation refers to changing the duration of any agreement for a certain period after the expiration of its validity period. Often this is 1 year, although sometimes it can be longer. It is used for contracts, the obligations under which were not fulfilled earlier.

Another case when prolongation is practiced is the actions of the parties that are of a regular nature, that is, constantly repeated. Examples of such agreements are:

• supply of goods;
• services of one organization to another;
• bank deposits;
• motor vehicle insurance transactions: CASCO, OSAGO;
• rental of premises;
• land plot.

In such cases, concluding a new agreement is irrational. All that is needed is to change several clauses of an existing agreement, that is, to introduce additional conditions (clauses).

Important! Regardless of the type of agreement that is subject to renewal, it is important that the procedure itself is described in the initial agreement. And clearly and unambiguously.

There is a practice of deliberately not specifying the duration of the contract. This is considered a legal action, and mutual obligations are completed after the parties fulfill the agreed conditions. They are often used in contracts for the supply of goods, performance of services, and loan repayment. Difficulties will arise if one of the parties fails to fulfill its obligations. If the agreement does not specify the deadlines for completion, as well as the period of validity of the transaction, there is actually nothing to sue.

Rental Features

“It’s worth keeping in mind the specifics of prolonging a lease agreement,” says Moscow lawyer Vitaly Smolyanov

, - We all know a little trick: in order to avoid going through the tedious state registration procedure, the contract should be concluded not for a year, but for eleven months. So, if such an eleven-month contract has a provision for auto-renewal, then it will calmly continue its validity. And registration is not required. The problem here may be that such an attitude “from the outside” looks like a lease for a period of more than a year (i.e. when state registration is required). But, upon closer examination, it is immediately clear that this is not a lease extension, but the beginning of a new, also eleven-month, contract, the terms of which are identical to the terms of the ended contract. Accordingly, since the new agreement is also designed for a period of less than a year, there is also no need for its state registration (clause 10 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 16, 2001 No. 5). Moreover, even if after the expiration of eleven months and the expiration of the contract, the tenant continues to use the property due to the provisions of paragraph 2 of Article 621 of the Civil Code of the Russian Federation, the lease agreement is considered renewed on the same terms for an indefinite period. But such an agreement does not need to be registered, because strictly speaking, it does not fall under the criterion of “at least a year” (see paragraph 11 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 16, 2001 No. 59).”

Anna Mishina

, for the magazine "Calculation"

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Consequences of ignoring extension

Often the necessary attention is not paid to contract renewal. This can lead to serious financial losses. A fairly simple but striking example. There is an agreement between the two companies regarding the supply of products. This action does not occur on time: the supplier transfers the goods after the expiration of its validity period, the moment of extension was intentionally or accidentally missed. The buyer does not pay the cost of delivery; naturally, a lawsuit follows to recover the amount and penalties for the delay, but the court refuses. This court decision is legal, the following arguments are in its favor:

• the agreement has expired, the terms for payment specified in it have no legal force. That is, in fact, the recipient of the consignment of goods may never pay at all;
• the provisions of the contract regarding penalties and damages are no longer valid, that is, it is not possible to recover anything.

Advice! In order to avoid such problems, even taking into account the above situation, the supplier should have sent the buyer requirements for payment for the goods before delivery.

Automatic renewal

Let's look at how the contract is automatically extended: the wording will be given below.

There are two options for auto-extending contracts:

1. In law.
2. At the will of the participants.

The first option works regarding energy supply transactions (Article 540 of the Civil Code), which, at the end of the term, with the silence of the supplier (energy supply company) and consumer (subscriber), are extended for the same time on the same terms. Similarly with a property trust management transaction (Article 1016 of the Civil Code): after five years it is automatically extended, unless the founder of the trust management or the trustee has refused this. The auto-renewal period can be three, nine, 15 and 40 years. The period depends on the property being managed.

Leases that have expired are renewed for an indefinite period (there are different maximum renewal limits for different types of property) if the tenant continues to use the property and the landlord does not object. However, this rule does not apply to rental and rental transactions of vehicles.

The second option (at the will of the participants) works when there are no direct legal instructions for auto-extension. Then, for example, the supplier and buyer, thanks to the principle of freedom of transaction, include clauses in the contract on its automatic renewal, if they do not contradict the law.

Example of wording

Formulations for short-term extension:

The occurrence of the noted circumstances automatically extends the document for the next year.

A document with an expired validity period is considered extended for the next year. when the parties remain silent about its termination.

Formulation in case of long interaction:

The parties can renew the document multiple times in this manner.

So, we have looked at how the contract is extended: the wording in the contract (sample below) allows you to leave the terms of the document the same.

Sample contract with automatic renewal

Automatic renewal contract

What does the law say?

The first main normative act that regulates contractual relationships is the Civil Code of the Russian Federation. It contains a clause that states that the extension is drawn up in the same way as the conclusion of the main agreement. For example, you need an extension of a transaction certified by a notary; to renew it, you will have to contact a lawyer again. One of the main ones is Article 425, which states that the parties undertake to fulfill the terms of the contract until all obligations are fulfilled.

If the extension concerns labor relations, then the norms and rules of this process are described in the Labor Code.

Another regulatory act, Federal Law 223, regulates the specifics of relationships between legal entities in the field of procurement of goods, services, and works. Article 44 of the Federal Law affects the extension of transactions that relate to government procurement.

Is it possible to extend the employment relationship?

For labor relations, the question of what it means to extend a contract is especially relevant. Sign a new one or change the existing one?

A fixed-term contract is extended in two cases:

• extension due to the employee’s pregnancy, if the period expires during pregnancy and the employee has asked for this in writing and provided a medical certificate of pregnancy (until the end of pregnancy or until the end of maternity leave, if such leave has already been granted) (Part 2 of Art. 216 TK);
• for certain categories of workers (teachers of higher educational institutions) (Article 332 of the Labor Code of the Russian Federation).

In other cases, it is safer to fire the employee and enter into a new fixed-term employment contract.

IMPORTANT!

Even in the Ministry of Labor, different specialists have different opinions regarding the possibility of prolonging labor contracts.

Letter No. 4413-6 dated October 31, 2007 explained that it is possible to make changes to an employment contract, regardless of its type (fixed-term or indefinite), including changing its expiration date. In particular, the extension of the powers of the head of the organization on the basis of a decision of the management bodies, if the contract term, taking into account the extension, does not exceed five years, is allowed (based on Articles 32, 33, 39 of the LLC Law, clause 2, part 12, article 58 of the Labor Code) .

But there is a letter from the Ministry of Labor dated December 8, 2008 No. 2742-6-1 stating that in this case a new contract is concluded with the manager.

Since letters from the Ministry of Labor are not binding regulations, the question of the possibility of extending a fixed-term employment contract remains controversial.

Example of an additional agreement to change the validity period of a fixed-term employment contract

___________________________________ (name), hereinafter referred to as "Employer", represented by ___________________________________ (position, full name), acting on the basis of ___________________________________ (charter, regulations, power of attorney), and ___________________________________ (full name, passport details ), hereinafter referred to as “Employee”, collectively referred to as “Parties”, guided by Art. 72 of the Labor Code of the Russian Federation, have concluded this Additional Agreement to the fixed-term Employment Agreement dated “___”________ ____, No. ___ on the following:

1. Paragraph ___ shall be stated as follows: ______________________________ (indicate the validity period subject to its changes, but not more than 5 (five) years).

2. All other provisions of the Employment Agreement remain unchanged.

3. This Additional Agreement comes into force from the moment it is signed by both Parties and is an integral part of the Employment Agreement dated “___”________ ____, No. ___.

4. This Additional Agreement is drawn up and signed in two copies having equal legal force, one of which is kept by the Employer, the other is transferred to the Employee.

Details and signatures

Extension of the contract: registration, wording in the contract (samples)

Before formulating a renewal clause, you should find out what legal methods exist for implementing this process.

Additional agreement

The first and most convenient is an additional agreement. Its terms remain unchanged, but the clause regarding the validity period changes. That is, if the agreement was concluded in 2016, then at the end of its expiration an additional agreement should be signed extending its validity for another year.

Document structure:

• name “additional agreement”, indicate the number of the agreement to which it is drawn up. The validity period and the date of its preparation are indicated;
• main part: it specifies the parties who take part in the conclusion of the addendum. agreements, persons responsible for this process;
• further, the validity period of the new contract, that is, the period of its extension, is given;
• possibly a description of the start date;
• it is important to indicate that the remaining clauses of the transaction remain in force;
• details of the parties.

An additional agreement is drawn up in two identical copies.

A similar structure can be used for any type of agreement in any area. If it is necessary to change some conditions, then these points are also described in the addendum. agreement.

Important! New conditions and validity period should not conflict with other clauses of the agreement executed earlier.

Extension without additional agreement

This option is often used, especially when it comes to certain contractual relationships that involve the performance of a particular action. In this case, the language describes the extension of the validity period in the absence of such. This means that the parties or one of the parties did not express a desire to terminate the agreement. Such documents also indicate the period for carrying out such actions. Often this is 10-14 days. If at this time the party does not express a desire to terminate the contract, then it is extended for the previously agreed period.

Automatic renewal

Most of these options relate to the extension of deposit agreements. That is, the period within which a person must apply for his contribution is indicated. If this does not happen, the agreement is considered automatically extended.

Often such issues relate to residential rental agreements, especially short-term ones of up to 1 year. In the case of rental relationships, the absence of a renewal clause risks the landlord being able to evict his tenants at any time after the expiration of the lease.

Important! Basically, automatic extension does not apply to loan agreements, since the repayment period and schedule are clearly described here.

About the benefits of prolongation

Speaking of automatic renewal, it greatly simplifies the life of counterparties, since if I want to extend the cooperation, I will have to renew the agreement. Also, the extension by law has a positive effect on stabilization and relations between the parties in general. If the contract contains the relevant provisions, the entrepreneur will not have to be distracted by re-signing the contract, which will take time.

When should you sign a new contract?

When the deadline for expiration of the contract approaches, the parties can enter into a new contract. For this purpose, new conditions are negotiated or everything remains unchanged. It is advisable to conclude a new agreement in a situation where the parties intend to cooperate in the future, but at the same time changing some points.

For example, if the owner of the premises wants to change the standard form of the contract. Thus, he can add any provisions or, conversely, exclude those already present. Often we are talking about clauses affecting liability, methods of fulfilling conditions, additional obligations or payment.

Conclusion

If we are talking about a company, the secretary must ensure that the manager always has access to the originals of all concluded contracts, as well as renewal documents. Inspection authorities or shareholders may need the papers at any time. There is no clear explanation in the law regarding the period during which the entire agreement must be kept. The recommended storage period for business documents is 5 years.

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Special conditions

The agreement may contain a clause regarding a renewal notification letter, which is sent by one of the parties. It is often written in the form of an offer to renew the agreement. It is not necessary to respond to such a letter, that is, if there is no refusal, the contract is considered automatically extended. The text might look something like this:

Of course, it needs to indicate the sender’s details, the date of compilation, and put a signature.

There are also features regarding the number of extensions. First of all, there is a legislative restriction on rental relations. Thus, the Civil Code of the Russian Federation states that the use of an apartment (room) may not last longer than 5 years, that is, if it is concluded for 1 year, then it can be extended no more than 5 times. Next comes the signing of a new agreement.

How can I extend the contract?

There are several ways to extend the contract:

• through the execution by the parties of an additional agreement, which indicates that the concluded agreement continues to be valid further, the extension period is fixed, for example:

  “Agreement No. 11 dated 04/02/2022. extended for 1 year";

• “validity period of contract No. 11 dated 04/02/2022. extended by the parties until December 31, 2022”;
• “the parties agreed that after the expiration of the contract, it is considered concluded for an indefinite period,” etc.;

The most convenient extension option for the parties to the agreement should be recorded in the text of the document. When choosing it, it is necessary to take into account the restrictions established by the Civil Code in relation to certain obligations. For example, if a citizen who rents out his apartment under a rental agreement is very satisfied with his tenants and does not intend to change them, he will be able to renew the agreement only for 5 years after its conclusion. This is the maximum period of its validity (Article 683 of the Civil Code of the Russian Federation). After the five-year period, a new contract is concluded with the residents.