An "Option to Renew" clause allows a contract to be extended beyond its original term under specified conditions, typically at the discretion of one or both parties. It typically outlines the process for renewal, including notification requirements and any changes to terms or pricing.
Term, Option to Renew Term and Purchase Option. 1. The “Term” of this Lease shall mean the Initial Term and any Option to Renewal Term(s) timely exercised by Tenant pursuant to Section 4.02 below, unless sooner terminated. 2. Provided that Tenant is not then in default under the terms of this Lease, Tenant shall have the option to renew this Lease for two consecutive eight-year terms (each, an “Option to Renew Term”) upon 120 days prior written notice to Landlord upon the same terms and conditions of this Lease, except that Base Rent shall be at the following rates: Years 8-15: $18.48 per rentable square feet of the Building per annum, paid in monthly installments of $77,000.00 per month. Years 16-23: $20.70 per rentable square feet of the Building per annum, paid in monthly installments of $86,250.00 per month. Tenant shall continue to pay Additional Rent during the Option to Renew Term(s) as provided in Section 3 above.
Option to Renew Term. The first paragraph of Section 4.02 of the Lease is amended to add the following sentence: “Notwithstanding the foregoing, the last day for Tenant to exercise its first Option to Renew Term for Years 8-15 is June 9, 2021.”
Extension of Term for Years 8-15. Tenant hereby exercises its Option to Renew Term for Years 8-15 as provided in Section 4.02 of the Lease and the Term is hereby extended to July 31, 2029, subject to Tenant’s Option to Renew Term for Years 16-23 as provided in Section 4.02.
An Option to Renew Term is a clause commonly found in contracts, particularly in lease agreements, that provides the lessee or party involved the right, but not the obligation, to extend the term of the agreement for an additional specified period. This option must typically be executed by notifying the lessor or the other party within a stipulated time frame before the current term expires. By offering flexibility, this clause allows the involved parties to continue their business relationship under predefined terms.
Using an Option to Renew Term is advisable in situations where parties might foresee a continued relationship beyond the initial term. Consider incorporating this provision when:
When drafting an Option to Renew Term, clarity and specificity are crucial. Here is a template to guide you:
Option to Renew Term
[Party’s Name] shall have the option to renew this agreement for an additional term of [duration] upon the same terms and conditions contained herein, except as otherwise agreed upon at the time of renewal. [Party’s Name] shall provide written notice to [Other Party’s Name] of its intention to renew, not less than [number] days prior to the expiration of the current term. If such notice is not given, this agreement shall terminate at the end of the current term, and [Party’s Name] shall have no further rights hereunder.
Ensure that the clause covers critical elements such as:
The Option to Renew Term is most commonly found in:
In each of these contracts, the specific nature and terms of the renewal option will vary based on the contract’s objectives and the negotiating power of the parties involved.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
The "Order Description" clause specifies the detailed characteristics and requirements of the goods or services being procured under a contract. It ensures that all parties have a clear understanding of what is being ordered, including aspects such as quantity, quality, specifications, and delivery terms.
The Outstanding Fees clause stipulates that any unpaid fees or dues incurred by one party must be settled within a specified timeframe. Failure to settle these outstanding fees may result in additional penalties, interest charges, or legal action to recover the owed amount.
The Ownership of Deliverables clause specifies who retains the rights to the outputs or products created under a contract. It typically determines whether the client or the contractor holds intellectual property rights, ensuring clarity on the use, modification, and distribution of the deliverables.
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