What is a Contract Extension?
A contract extension is an agreement between the parties to an existing contract to extend the terms of that agreement for an additional period of time. The duration of the extension is specified in the extension agreement.
In some cases, the extension does no more than extend the termination date of the contract. In other words, all other conditions of the contract remain exactly the same. For example, a contract extension agreement may provide: “The contract between the parties dated January 1, 2018 and ending on December 31, 2018, shall be extended through and including December 31, 2019.” On the other hand, an extension can also change other terms of the contract, in addition to the termination date. Many contracts provide in detail the formalities that must be followed to extend the contract.
Contract extensions are not unusual. One high profile situation often reported by the media concerns coaches and athletes who often agree to contract extensions. Of course, they usually include nice salary increases. Another common scenario is in real estate agreements. Sometimes, parties who have been unable to close a deal by the time originally agreed to in their contract will agree to an extension which provides additional time to consummate the deal.