In the optional renewal example, Party A explicitly said, "I exercise my right to renew the contract," twice.Ĭontracts also automatically renew for succeeding periods without an explicit exercise of an option. Party A may only renew this Agreement for three (3) additional terms. Must exercise its right thirty (30) days prior to termination of the then current period.Ĭontracts can also specify the number of renewal options that a party has. Party A may, in its sole discretion, elect to renew this Agreement for successive one (1) year periods.
One party has a unilateral right to renew the contract for a specified time. Party A does that for two years and then stops. In this example, Party AĪnd Party B have entered into a contract that gives Party A the right to renew for successive one year periods. Optional renewalĬontracts often grant one party a unilateral right to renew the contract at its election. Most common reason is that auto-renewals have wrinkles to give them character. Why not just use the end date of the last auto-renewal period as the end for the entire contract? Good question. Contract timeline with two auto-renewal periods. Maybe renewal happens automatically for more than one period. Simple, single term auto-renewing contract timeline. First, contracts with automatic renewals might simply renew for a certain Many contracts renew at the end of the term, which means that the end date is not much of an end date.Ĭontract renewals come in several flavors. Trigger our automatic alerts prior to termination. We can use the effective date to send notifications to the business that the contract is in force. There is no option to extend or renew the contract.Įven if the contract has survival provisions or contingencies, it is still definite for purposes of contract Even if they are evergreen (indefinite end date), contracts still addressĪ contract with a definite term has only a start and an end date. Timeline of a contract with a definite term.Ĭontracts address at least these two points in time. The start date is typically called the effective date. To calculate the term, we need to know at least one date, usually the
The term of a contract refers to its duration. Know when to set automatic alerts and notifications. For effective contract management, we need to This article explains how toĬlassify contract terms. It can be surprisingly difficult to know when a contract ends.
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