CVE 4603 Construction Contract Management

Spring 2022
26 January 2022

Lecture #12: Contract Renewal

1. What is meant by Renewal?

Contract renewal is “reviving” an existing contract after it ends. The parties agree to
enter into a new contract (usually for the same or very similar services).

2. Examples of Contracts that are normally renewed

A. Service Contracts by Contractors, vendors, and the like.

B. Short-term Contracts that involve the installation of materials and equipment.
C. Landscaping: Contracts that complete certain jobs (such as landscaping) but are
later required to be renewed for the purpose of completing additional tasks such
as replacement of flowers, trees, etc.

3. Objectives/benefits of Contract Renewal

A. Contract that come up with the intention to renew allow contracting parties to
assess whether they want to continue with the Contract on not.
B. This is because short-term Contract provide an evaluation period for each
contracting parties to assess their relationship with the other party, etc.
C. Short-term contracts maybe required an essential for jobs that are normally
completed in intervals. Refer to the landscaping example above.

4. The “Retainer”
A retainer is actually an amount of money that is paid to an entity that is in Contract
with another entity to keep them onboard during a time when they are not
performing any services. A Retainer is considered as a legal Contract.