Where you have a right to renew, check what contractual requirements you must fulfil (if any) to exercise your right and consider the following:
- Notice: What period of notice are you required to give to exercise your renewal right? Does notice need to be provided in a particular way and/or submitted to a specific address? Note that some contracts expressly exclude notice via email. If you fail to provide notice in accordance with the contractual terms, the other party may argue that the notice is ineffective as it has been provided incorrectly.
- Agreed terms: On what terms is the contract to be renewed? Do you have a contractual right to vary the existing contractual terms for the renewed period (for example, pricing)? If yes, is there a period of time in which the parties must mutually agree to any variations prior to the intended renewal date? Often, parties miss out on the opportunity to vary key contractual terms, such as pricing and rebates, because they failed to agree on the variation by the cut-off date.
- New term: How long is the renewal period? Is there an option to renew the agreement again following the expiry of that period? You should diarise the expiry date of the agreement so that you give yourself enough time to find an alternative supplier, should one be required.
If you do not have a contractual right to renew the agreement, but wish to do so, you should get in touch with the other party and discuss the possibility of agreeing to a renewal.
- Understand that not all agreements provide a contractual right to renew.
- Read and understand the contract in question (especially the renewal provisions).
- Follow the contractual renewal process to avoid disagreement between the parties.
- Where the agreement is varied on renewal, keep a record of the communications between the parties agreeing to those changes.