Subsisting Contracts: Understanding the Basics

Contracts are an essential part of doing business. They provide a formal agreement between two or more parties that outlines the terms and conditions that govern their working relationship. In some cases, contracts can extend beyond the initial agreement, and these are known as subsisting contracts.

In general, subsisting contracts are agreements that continue to be valid and enforceable even after their original terms have expired. These contracts often arise in situations where the parties involved continue to perform under the terms of the agreement, even after the original end date.

For example, consider a rental agreement between a landlord and tenant. The contract may state that the tenant has a one-year lease, with the option to renew for another year. If the tenant decides to renew the lease for another year, they are entering into a subsisting contract, which continues to be valid and enforceable even after the initial one-year lease period has ended.

Another common example of a subsisting contract is an employment agreement. In many cases, these agreements will have an initial term, such as one year. However, if the employee continues to work for the employer after the initial term has expired, the agreement will be considered a subsisting contract.

It`s important to note that just because a contract has expired does not mean that it is no longer valid. If the parties involved continue to perform under the terms of the agreement, then the contract will still be considered subsisting. However, if one party fails to perform their obligations under the agreement, then the contract may no longer be enforceable.

One common issue with subsisting contracts is determining when the agreement has ended. In many cases, the parties will continue to perform under the terms of the agreement, even though the original end date has passed. To avoid confusion, it`s essential to include language in the initial contract that clearly outlines when the agreement will end and how it can be renewed or extended.

In conclusion, subsisting contracts are an essential part of many business relationships. These agreements allow parties to continue working together under the terms of a previous agreement, even after the original end date has passed. However, it`s important to ensure that the terms of the agreement are clearly defined and that both parties understand their obligations under the contract to avoid disputes down the line.