The signing of a contract is not the end of the process, but rather the beginning of its lifespan. Until its expiry date, the contract will continue generating effects that are important to anticipate.
Therefore, it is essential to consider the different hypotheses for termination, and the resulting consequences in the relations between the contracting parties.
A badly anticipated early contract termination may, in effect, become the source of conflict and generate new risks that may be difficult for the company to control.
Each type of situation requires a specific approach: the termination of a fixed-term contract cannot be managed in the same was as a permanent contract.
When a fixed-term contract is automatically continued after its expiry date, without an explicit extension through renewal or amendment, the question of the validity of the decisions made during this ‘grey’ period arises.
During the course of the execution of a permanent contract, certain clauses may need to be adapted in order to enable the continued pursuit of objectives within the framework and/or through different means than those originally planned.
Finally, the easy option of a “tacit renewal” does not always prove to be the most appropriate or the most practical.
Beyond the legal mechanisms, practical considerations must also to be taken into account: the fate of stocks and orders at the end of license; operational procedures for intellectual property assets developed in the framework of an R&D contract; conditions for the commercialisation of products sold under the trademark of one of the contracting parties; management of the practical consequences of one of the partners leaving a franchise contract; flexibility of the confidentiality agreements.
These issues may arise concerning an isolated contract but also as part of a more complex contractual framework. It is necessary to ensure coherence and a synchronization of the effects relating to the end of these contracts.
The contract thus remains a living tool which needs monitoring throughout its implementation and beyond.
