What is the difference between a contract renewal and contract extension?

Answer 1

Contract renewal is renewing your current contract when it expires. Contract extension is one is extended the contract for a shorter period of time and the language of the contract is the same as existing contract. When a contract is renewed it is generally for a longer period of time and there might be alight changes in contract. In other words an extension is short term contract that is used as a short term deal until both parties can agree on what the want.

Answer 2

In many business relationships, contracts are renewed at the end of their terms. However, this renewal is different from an extension. In the contract renewal, both parties agree that they will create a new agreement that replaces the current one. This new agreement may have different terms, a change in pricing, or any number of other variables. An extension usually happens when the party who has the right to terminate the contract decides not to do so. Because they have held on to the rights of termination, they have extended the contract for a specific amount of time with new terms.

When considering renewal vs. extension, there are several key differences between the two. First and foremost, extending a contract is formally adding it to the contract portfolio while renewing a contract is replacing the existing one. Another distinction between renewal and extension is that renewal centers on agreeing to the same terms of the current contract, whereas the terms included in an extension may be different from those of the original agreement. This can be seen in how renewal is more suitable for situations where both parties wish to continue conducting their business under similar conditions as under their previous agreement, whereas extension allows for changing the terms set out in a previous agreement, as well as including any new terms that might be agreed upon.

Dock 365 is a contract management software that leverages lifecycle based workflows to help users automate contract processes and ensure complete contract visibility for their buyers and sellers.