When it's time to renew a contract with a client or vendor, you first need to do some research. Comb through your original contract and make note of anything that needs altering or has become obsolete. You may want to reset the terms of the original contract or update pricing and other key details. Then, if you still want to renew, it's time to write an official letter for renewal of contract.
What to Review
Here are a few items to consider when looking over the original contract:
- Duration and renewal terms: How long was the duration of the original contract? Did the timing work for your business or would you prefer a longer or shorter contract this time around?
- Objectives/Deliverables: Were the objectives met in the original contract? Let's say this is a vendor who was supposed to deliver coffee to your offices on a weekly basis. Was the correct amount delivered in a timely manner each week?
- Pricing: The price of the coffee has risen since the original contract was drawn up. Because you've been a reliable customer, consider requesting the same price or a discount. One of the benefits of establishing a contractual relationship with a vendor is the increased opportunity for discounted rates.
- Other possible vendors: If it's time to renew a contract, this is your opportunity to research and compare the rates of other vendors. You may be happy with your vendor, but if you find lower rates elsewhere, switching vendors may be worth it. Or you can bring the other vendor's prices up to your current vendor and they may decide to lower the price.
Contract Renewal Letter Sample
A contract renewal letter can be short and concise. This is not the contract itself, which is longer and will require more thought. It's merely the letter asking to renew. So, the aim is simply to open a line of communication. Lay it out like a business letter.
Your name and address Date Vendor's name and address
State the date your contract was signed and note when it will end: Our contract for coffee delivery at X locations, which we signed on April 15, 2017, is due to expire on April 15 of this year.
Ask to renew and request new terms: We are interested in renewing this contract but have a few requests. We'd like to extend the duration of the contract to two years. Because of this extension and our continued dedication to your business, we are requesting a discount on the monthly payment.
Request a meeting or phone call: In order to go over these newly proposed terms, I'd like to sit down together next week, if possible. Let's sort out the details then get a new contract signed. We look forward to doing business with you.
Always Review Before You Renew
The renewal of contracts is an important part of running a successful business. It's tempting to simply renew contracts each year if things have been running smoothly, but it's always a good idea to closely look at the terms and improve them. You may feel as if you don't have time to do this with every contract, but the time you take to review your terms with every vendor will pay off in the long run.