Legal Definitions - extension agreement

An extension agreement is a formal understanding between parties to an existing contract that grants additional time for one or more obligations under that original contract to be fulfilled.

Essentially, it modifies the original agreement by pushing back a deadline, allowing more time for a specific action or the entire contract to be completed without being considered a breach.

• Example 1: Real Estate Purchase

  Imagine a buyer and seller have a contract for the sale of a house, with a closing date set for July 15th. A week before closing, the buyer's mortgage lender informs them that the final loan approval will be delayed by two weeks due to unforeseen administrative issues. To avoid the contract expiring or being breached, the buyer and seller sign an extension agreement. This new agreement formally pushes the closing date to July 29th, giving the buyer the necessary additional time to secure their financing and complete the purchase.

  This example illustrates an extension agreement because it provides extra time for the original real estate purchase contract to be performed, specifically by moving the deadline for the closing.

• Example 2: Business Service Contract

  A small business hires a web design agency to create a new e-commerce website, with a contractual deadline for completion and launch by September 30th. During the project, the business decides to add several complex new features that were not part of the original scope, significantly increasing the workload for the agency. Recognizing the impact of these changes, the business and the web design agency enter into an extension agreement. This agreement formally adjusts the project timeline, moving the website launch deadline to October 31st, acknowledging the additional work required.

  This demonstrates an extension agreement as it grants the web design agency additional time to fulfill its obligations under the original service contract, accommodating changes that impacted the initial timeline.