Is it possible to extend the duration of the contract (period of its execution)?

A letter to extend the term of the contract is drawn up in the case where such a condition for its extension was specified in the original contract. In this case, there is no need to sign additional agreements or rewrite the terms of the initially reached agreements.

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It is not necessary to draw up this document if the contract implies an indefinite (unlimited) period. In all other cases, when one agreement between counterparties expires, some method of extension must be applied. Otherwise, the contract will be considered terminated.

Components of a letter

The letter is ideally printed on the organization's letterhead. This way, your contact details and name will be guaranteed to be at the top of the page. If you don’t have special forms at hand, then standard A4 format, office paper, will do. It should contain the following information:

• Date the letter was written. If this is accepted in the organization, then the number.
• The addressee to whom the letter is intended. In the upper right part it is customary to write your full name and also indicate your position. Naturally, if the letter is sent to an organization.
• Who is sending the message? If it is sent on behalf of the organization, then this is its leader. It is necessary to indicate not only the full name, but also the position and full name of its leader.
• A reference to the agreement that was concluded between its parties.
• If possible, reference to the clauses of the contract, according to which the extension of the agreement occurs in this way.
• From what date to what date will the terms of the existing agreement be extended?

The letter is certified by the “autograph” of the manager or a person who has the appropriate rights to sign business documentation.

Features of interpretation

• the presence in the text of the agreement of a clause on prolongation for a new term contradicts the essence of the rental relationship and is considered illegal if a fixed-term agreement was concluded (see Article 606 of the civil law);
• indication in the primary lease agreement of a pre-agreed condition for automatic renewal, in accordance with Art. 209, limits the right to dispose of property on the part of the tenant;
• if the property remains at the disposal of the tenant after the expiration of the contract, and the owner himself has nothing against this state of affairs, it is allowed to renew the terms of the agreement for an indefinite period of validity, while maintaining the terms of the lease unchanged.

In 2021, the main rules relating to contracts and obligations are enshrined in the Civil Code of the Russian Federation. This regulatory document can clarify the rules for making changes to agreements, including those that affect their validity period.

As for the extension of labor relations, the main norms in this area are enshrined in the Labor Code of the Russian Federation. This document can clarify the specifics of extending employment contracts.

We invite you to read: Land lease agreement for residential construction

Legal nuances concerning the execution of contracts of a specific type are also regulated by the Civil Code of the Russian Federation and additionally by special legal acts.

If there were certain conditions when drawing up the main agreement, then when signing the extension agreement they must be met. For example, when registering the first document, all additions must be registered with the same body. If the main agreement has been notarized, then the additions to it must also undergo the same procedure.

Legal essence

Often the parties to a contractual relationship do not specify a completion date for the agreement. At the same time, the extension of its validity period is the period during which the parties to the transaction continue to fulfill their own obligations. For example, the extension of a contract may involve changes to the schedule on the basis of which goods are delivered.

The legislation does not clearly define the term “extension”. However, this concept is legally literate and is widely used by notaries, lawyers and employees of the judicial system.

Acceptable methods

There are also alternative extension options.

Eg:

• The text of the main agreement states that the terms can be extended by exchanging emails between the counterparties. Each party to the transaction sends a letter in which it expresses a desire to extend the contract for a certain period. After this, the agreement is considered automatically extended.
• Automatic extension according to the terms of the contract. If the document states that if neither party has any objections, then it will be extended. Automatic renewal deals are especially common in the rental industry.

Legal subtleties

When concluding contracts, special attention must be paid to deadlines. If we are talking about prolongation, then it is necessary to clarify how many times you can resort to extending the period and under what conditions. During legal proceedings, there are often cases in which counterparties have different points of view on exactly when a particular agreement expired. A letter about extending the agreement in this case will be a guarantee from the second party that the first was aware of the extension of the agreement.

An important nuance: the letter must receive a response with confirmation or refusal to extend the agreement. All parties must express their consent, only in this way the conditions will remain the same.

If the terms of the contract need to be adjusted, then it will be more convenient to draw up an additional agreement. This method is most common in our country.

Review of Basic Concepts

In the practice of business relations, a situation is possible when partners are satisfied with the terms of the existing agreement, and they do not plan to change anything in it.
In such a situation, the contract period should be extended. To do this, you need to conclude an additional agreement to the existing contract.

After this phrase, a clause is added that all the terms of the previous contract remain unchanged. If the parties want to update some of the terms of the “old” contract, then they should indicate which ones.

Reference

Note!

There are contracts that extend their validity without any special indication of this in the text. These include energy supply contracts. The contract is concluded for a certain period. If before the end of its validity period neither party declares termination or changes in conditions, then the contract is considered extended for the same period.

Another option for an additional agreement is a document that does not extend the contract, but makes special changes to it. The essence of these changes is that the contract will now be renewed automatically.

Rice. 1. Sample additional agreement on contract extension

How the supply agreement differs from other sales and purchase agreements, read the article.

The agreement form is here.

Agreement

on renewal of the lease agreement

_________________ "__" __________201_

Open Joint Stock Company "_____________________", hereinafter referred to as the Lessor, represented by the General Director ____________, acting on the basis of the Charter on the one hand, and the Limited Liability Company "_________", hereinafter referred to as the Tenant, represented by the General Director ____________, acting on the basis of the Charter on the other hand the other party, and together hereinafter referred to as the Parties, have entered into this agreement on introducing amendments and additions to the lease agreement for non-residential premises No. ... dated ... 20__.

“The Lessor rents out, and the Tenant accepts for rent, non-residential premises located in the building at the address: ____________, st. ______________________ d. __, building No. _, namely rooms: No. _____ with an area of ​​___ sq.m., No. ___ with an area of ​​___ sq.m., No. ____ with an area of ​​___ sq.m., the total area of ​​the rented premises is _____ sq.m., in allowing their normal operation."

“The rental period for the premises is extended by 363 days from the date of entry into force of this agreement.”

“The rent is set at the rate of... (...) rubles per sq.m. per year, including VAT, utilities. The total amount of payment per month is ... (...) rubles ... kopecks.”

4. Further in the text.

5. These changes come into force from ... 20__.

6. The signed texts of this agreement, one copy each, are kept by the Lessor and the Lessee.

JSC "__________"

OOO "___________"

from the Lessor

CEO

JSC "________"

___________________

from the Tenant

OOO "__________"

____________________

The law provides for the conclusion of a contract for compulsory rental housing for a period of more than a year. To avoid taxes, landlords usually rent the property for 11 months. The agreement is also drawn up for a specified period. Of course, if money is transferred from hand to hand, you can do without documents. But this significantly increases the chances of fraud or damage to property.

After 11 months, the question arises: should I draw up a new document or renew the old one? In practice, both methods are used.

Such a development of events is quite possible.

But, based on judicial practice, it is almost impossible for the non-executive party to justify its position. Therefore, if there are no additional conditions for the lease, you can simply draw up an additional agreement for extension.

Let us note one fundamental point. The agreement contains information only on the lease terms. It is impossible to include changes in rent, rules for handling property, etc. in one document. You can draw up several additional agreements, but it is much easier and more correct to draw up a completely new document.

You can include automatic renewal in your real estate contract. Also write down its conditions. For example, if the tenants do not lead an asocial lifestyle and have kept the property intact, then the contract is automatically extended for the same or another period specified in advance.

Is it possible to renew the additional agreement automatically? Yes, it is quite. These include water supply or travel insurance contracts.

Ultimately, any change in documents requires additional agreements. The document is drawn up with the voluntary consent of all parties to the transaction. In fact, it is drawn up in the same way as the main contract, although it does not have a strict composition. Any adjustments not specified in the additional agreement are made through the court.

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Changing the validity period of the agreement is possible both by agreement between the parties and by virtue of legislative requirements. The parties to the transaction can independently decide for what period the document will be extended. However, for some types of obligations, a maximum period is established at the legislative level, beyond which it will not be possible to extend the contract.

To renew the main document, you do not need to draw up a second agreement. The extension mechanism may already be provided for in the text of the original agreement. In the legislation of the Russian Federation, there are regulations regarding the automatic extension of the contract.

The wording “lease extension” means the extension of the lease relationship after the expiration of the contract period. The law allows the transfer of lease for any period at the discretion of the parties, however, depending on the duration of the agreement, there are some nuances.

If the contract expires 11 months after its conclusion, it is considered short-term. Leases for a period of more than a year require registration of the tenant's rights in the unified Rosreestr database.

The establishment of a term under a contract is regulated by general civil law. The basic rules for renewing a lease can be found in Art. 621 Civil Code of the Russian Federation.

• Conscientious fulfillment of the provisions of the current contract gives priority to the right to renewal when choosing a new tenant.
• To renew, you must follow the procedure for notifying the lessor in advance, before the document expires. The period allotted for notifying the owner is indicated in the clauses of the primary contract, and in its absence, the principle of reasonableness is adhered to.

• the tenant continues to fulfill the terms of the contract using the transferred residential premises (apartment, other property) even after expiration;
• the owner does not prohibit continued use, subject to continued compliance with the conditions specified in the expired contract, while the validity period of such relations is recognized as indefinite.

We invite you to read: Vodokanal conclusion of contracts for non-residential premises

Extension methods

Faced with the need to continue the lease, the parties to the lease relationship agree whether a renewal needs to be registered and consider various options for registration. The simplest option is to renew the contract in accordance with the provisions of the law, subject to the parameters specified in Part 2 of Art. 621 of the Civil Code of the Russian Federation (i.e. the tenant continues to use the property, and its owner does not prohibit it from doing so).

When a consensus is reached, the parties independently determine the method of formalizing the new lease relationship, if the provisions of the new document do not diverge from legislative norms.

Conditions

In order for the mutual consent of the counterparties to be a sufficient condition for the continuation of existing agreements, the main agreement must stipulate:

• Validity.
• What methods of extending the agreement exist?
• How many times can the contract be renewed (one, two, unlimited).
• How one of the parties (or both) can terminate the contract.

It is also worth considering that it is impossible to extend something that has already ended. The contract must be renewed before it is terminated.

Otherwise, there is a possibility of errors and the possibility of fraud by one of the parties.

In most cases, if there is a constructive business relationship between the parties and the terms are clearly stated, misunderstandings are eliminated.

Reasons for extension

The execution dates of contracts under Federal Law 44 were previously postponed only by court decision. The courts were categorical - the plaintiffs proved the insurmountability of the circumstances. In the current version of Art. 95 states whether it is possible to extend the contract period under 44-FZ in 2021 - it is possible, in certain situations:

1. Reduced financing from the customer.
2. Based on a decision of a state authority (local government), adopted in the presence of a number of conditions.
3. In procurement for construction, reconstruction, major repairs, demolition of capital construction projects, and work to preserve cultural heritage sites.
4. In purchases from a single supplier under clauses 1, 8, 22, 23, 29, 32, 34, 51, part 1, art. 93 44-FZ.

Still have questions? ConsultantPlus experts analyzed all possible situations for extending the contract. Use these instructions for free.

Shelf life

Typically, business correspondence has a short shelf life, but this does not apply to a contract renewal letter. It must be preserved exactly as long as the contract itself is stored.

The agreement may be permanent or temporary. Can be stored for 5, 10, 75 years. This will depend on its specifics. And the letter should be attached to it and kept for as long as he does.

This point must be taken into account by the employee who is responsible for storing documentation in the organization. If a paper form of storage is implied, then it is better to seal these two documents, especially if an additional agreement on extending the validity period has not been drawn up.

Is the duration of the contract relevant to the essential conditions?

Based on Part 2 of Art. 34 44-FZ, when signing a contract, it is necessary to take into account that in the future its essential conditions are not subject to change. At the same time, 44-FZ itself does not indicate what exactly can be considered an essential condition, and whether the duration of the contract applies to them.

According to the norms of the Civil Code (on which the provisions of 44-FZ must be based), essential conditions include agreements on the subject of the contract, as well as other conditions that are necessary for the implementation of such contracts.

The Civil Code also has several articles relating to essential conditions. This is Art. 457 – according to the delivery time of goods, according to Art. 708 – according to the start and completion dates of work, according to Art. 783 – terms of provision of services.

Taking into account paragraph 2 of Art. 42 44-FZ, we can conclude that the essential conditions for any contract with state and municipal customers include conditions on the timing of fulfillment of obligations under the agreement.

Government contracts come into force once signed by the parties. In this case, the contract must contain an indication of the final deadlines for completing the work. Without specifying the terms, a government contract can be considered invalid due to the absence of essential conditions.

Consequently, the procedure and timing of delivery of goods, performance of work and provision of services are considered essential conditions for the implementation of a government contract. This conclusion is confirmed by the explanations of the regulatory authorities, in particular:

• Ministry of Finance, which he provided in letter dated 2021 No. 02-02-15/24252;
• MED in letters dated 2015 No. D28i-2020, dated 2021 No. D28i-1818;
• in the letter of the Treasury of Russia dated 2015 No. 07-04-05/09-319.

The parties are not allowed to change the essential terms, except for certain exceptions listed in Art. 95 44-FZ, when conditions can be changed by agreement of the parties. The legislation provides a complete list of exceptions when changes to the contract are allowed, and it is not subject to an expansive interpretation. The duration of the contract is not presented in the list of exceptions (taking into account Article 95 of the 44-FZ, clause 1 of Article 432 of the Civil Code, part 13 of Article 34 of the 44-FZ).

How to renew?

To renew, you can use several methods: enter into an additional agreement, draw up a new contract, or send a notification letter to the lessor.

Additional agreement

Drawed up if both the landlord and the tenant(s) agree to all the terms of the contract renewal. The additional agreement must have the same type and form as the main one, for example, a computer or handwritten version.

It may contain new clauses that were not in the previous agreement, cancel some provisions of the main agreement or change the conditions specified there. An additional agreement may, for example, set out conditions for the purchase of non-residential real estate by the tenant after he has paid the full cost of the premises.

If the rental amount changes, the new VAT amount must also be entered. You also need to take into account that the law allows rent increases no more than once a year. If the contract or additional agreement states otherwise, this clause is considered void.

Those provisions of the main contract that remain unchanged are still in force and are binding and enforceable by all parties. The additional agreement is drawn up and signed in two copies (if there are several tenants, then the number of copies is determined by the number of all counterparties).

If the original contract was notarized, then this procedure must be carried out with an additional agreement. If an additional agreement is concluded for a period of more than 1 year, it must undergo the procedure of mandatory state registration in Rosreestr.

A new lease agreement for non-residential premises is drawn up in accordance with the requirements for the execution of lease agreements prescribed in the Civil Code of the Russian Federation.

If the contract is concluded for a period of more than 1 year, it must be registered with Rosreestr. Registration reduces risks for both the landlord and the tenant. But in Russian practice, it is quite common to enter into a lease contract for non-residential real estate for 11 months in order to avoid the mandatory registration procedure.

The tenant sends a letter of notification to renew the existing contract for the lease of non-residential premises to the landlord if he has a priority right to lease. Such a letter is delivered personally or sent by mail.

In the notice letter, the tenant requests to renew the lease agreement under the same terms and specifies the terms.

We invite you to read: Lease agreement for industrial premises by legal entities

What to do in case of refusal?

The most convenient way to renew an existing contract is automatic renewal, i.e. extending its validity for a specified period.

When one contract expires, a new one comes into force the next day under the same conditions. Unless the partners have agreed otherwise (clause 10 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 16, 2001 No. 59).

Write down the clause on automatic renewal as clearly as possible. It often causes controversy and disagreement.

Reference

Example

The position for how long the automatic extension of the agreement is valid remains controversial. For one year or for all subsequent years, turning the contract into an open-ended one.

Please note that in our example it is written “renewable for each subsequent year” to remove possible disagreements.

Sometimes partners specify in the document the right of any of them (or only one) to terminate the contract early. This right is enshrined in law (Article 310 and Article 450 of the Civil Code of the Russian Federation).

By law, in the event of early termination of a contract, the initiator sends his partner a notice of termination. It is delivered in person against signature or sent by registered mail with a list of the contents and a notification of delivery.

Automatic lease renewal means that counterparties do not need to do anything at all to renew the contract. This extension method is used in two cases:

• If auto-renewal is specified in the terms of the contract.
• If the conditions contained in Part 2, Art. 621 of the Civil Code of the Russian Federation (the tenant continues to use non-residential real estate after the expiration of the rental contract and the lessor does not object to this). In this case, the lease contract will be considered automatically extended for an indefinite period.

Important! If the landlord, who has the exclusive right and complies with all the conditions, is refused by the tenant to renew the contract and within 12 months has entered into a rental agreement with another counterparty, then the original tenant can go to court. This issue is regulated by Part 1

Art. 621 Civil Code of the Russian Federation

.

Thus, a lease agreement for non-residential premises can be drawn up for a definite or indefinite period. In the first case, it is possible to extend such an agreement. The tenant with whom the contract has already been concluded has a priority right to its renewal over third parties.

The exclusive right is retained by the tenant only if the necessary conditions are met:

1. the absence of restrictions on such a right specified in the current lease agreement or in the legislative acts of the Russian Federation;
2. the tenant complied with all the terms of the current contract;
3. the lessor was notified in a timely manner of the intention to extend the agreement (at least three months in advance or within other periods if they are specified in the current contract).

There are four methods of renewal: automatic renewal for a new period, concluding an additional agreement indicating an extension, concluding a new lease contract taking into account the provisions on the exclusive right of the tenant, forced extension of the agreement through a judicial authority.

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