We have a contract in place and are negotiating a new contract. The other party is claiming that since no billing has occurred under the current contract, then any recent work performed should be under the new proposed contract. I disagree, any work performed until a new contract is fully executed falls under the existing contract. True?
3 Answers from Attorneys
Not necessarily. It depends on the final new contract terms. If it is negotiated and documented as a novation of the old contract, it goes back and replaces the old contract. If it is negotiated as a termination of the old contract and replacement with a new contract, then the old contract is in force until the new contract begins. So the answer is determined by the negotiations for the new contract. Only if you never have a new contract executed does the old contract control beyond doubt.
You are essentially correct. It all depends on how you structure the new agreement as my colleague explains. But unless and until that is executed all you have are the terms of the current agreement that will control. You can replace the old contract for the new one. Or you can create a new one that takes effects on a specified date of execution.
If you need clarification, I suggest that you consult with a lawyer in private and discuss your objectives in more detail. You can start by calling around to several for a free phone consultation, get some insights then pick the best fit to work with.
DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed on the basis of this posting.
In addition to what the other lawyers have said, another element that would control is whether the first contract specifies a termination date, the date on which the contract ends. If the work was done before the stated termination, it follows that the work is done under those terms. Work done after the termination date are not covered by that contract and are subject to separate negotiation.
Contract terms are negotiable. One party cannot decide what the other party will accept. If your preference is that the recent work be included in the previous contract (or by those terms), then you can require that to be a term of the agreement. Likewise, the other party may refuse, which is what seems to be happening. Until you both agree on all terms, there is no enforceable contract.