Contracts are used in a variety of situations, including employment, commercial sales of goods and services, as well as in banking arrangements and real estate transactions. In ongoing business arrangements or in employment situations, contracts may be extended or renewed to continue the business relationship. Generally, all parties want to formally acknowledge the renewal of a contract. Renewals should be done in writing and should accurately reflect the terms of the parties' expectations throughout the new period of the contract.
Review the terms of the old contract before renewing the contract to see if any modifications are necessary. If the contract will be renewed as is, no amendments will be necessary but only a written acknowledgement by both parties that the contract will be extended.
Write the modifications to the contract in a letter. The letter should refer to the old contract by naming the parties and the date of the contract, and the letter should state that both parties wish to renew the old contract and expressly specify the date the renewal goes into effect and the date that the new contract will end. The letter should clearly explain how the old contract is modified; for example, if you wish to change the wording in one of the clauses of the old contract regarding how disputes are resolved, you would do so by stating, "Paragraph 5 is replaced with the following: 'Parties shall submit disputes to the AAA.'"
Obtain the notarised signature of all parties in the old contract. Parties must sign the letter modifying the terms of the contract for it to be legally valid. If the party is an entity, rather than a natural person, an authorised officer must sign on behalf of the entity. Have a notary public witness the signatures and stamp the letter of modification.
Acknowledge the renewal of the contract in writing, if the old contract is to be extended without modifications. Write a letter of acknowledging that the contract is renewed and obtain the notarised signatures of all parties. This letter of agreement should simply state that the parties wish to renew the old contract (refer to the date of the contract) and that the terms of the old contract remain in effect. Attach a copy of the old contract to the letter agreement and have the notary witness the signatures and stamp the letter of agreement.
Celebrate the contract renewal. Invite the parties to toast the renewal either formally or informally, depending on the preference of the parties. Serve hors d'oeuvres and beverages; recall the milestones of the contract.