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Expiration of a Contract
The expiration of a contract is generally the ending or completion of a contract according to its own terms. For example, a lease agreement simply expires on the date agreed to by the parties and included as a term in the contract.
While contract expiration occurs most commonly by date, it is not the only form of expiration. A contract can also expire based upon the occurrence of an event. For example, a supplier may have a window of time during which to deliver a product to the buyer. The contract might provide that upon making the delivery, the contract will be completed.
Contract drafters sometimes use “expiration” and “termination” interchangeably. Some drafters prefer to use “expiration” to refer to a natural ending of the contract and “termination” to refer to a premature ending of the contract.
Some lawyers believe that expiration is simply a form of termination, and subsumed by it. On the other hand, some attorneys believe that the two terms are completely different. It is important to recognize that the way in which these terms are used has resulted in contractual disputes and litigation. Therefore, contracts should be drafted carefully to avoid ambiguity (and litigation).
Frequently Asked Questions
What’s the difference between contract expiration and termination?
Expiration is the natural ending of a contract once its term runs out or its conditions are met, while termination usually means someone ends the agreement early under a right the contract gives them. Drafters don’t always use the words that way, though, and the sloppy overlap has caused real disputes, so define both terms clearly in the agreement itself.
Can a contract expire without a specific end date?
Yes. A contract can end when an agreed event happens rather than when a calendar date arrives. A supply agreement might expire once the final delivery is accepted, and a project agreement might expire when the described work is finished and paid for. Event-based endings need careful drafting, since the parties have to agree on exactly what counts as completion.
What happens if you keep working after a contract expires?
Performance after expiration puts both sides on shaky ground. There’s no live agreement setting price, scope, or liability, so a court may have to imply terms from the parties’ conduct, and that’s rarely what either side expected. Some contracts include holdover or evergreen language that keeps things running. If yours doesn’t, sign a renewal or an extension before the end date passes.
