Legal Question in Business Law in California

We have an expired written contract that expired in June of this year. The expired contract contained rebates for performance. The parties are interested in signing a new contract but the supplier is insisting on making the contract retroactive to include the rebates they would have been entitled to should the contract not have been allowed to expire. The period of performance was crystal clear and it did not contain any automatic renewals (evergreen language). My position is that this is not lawful based on the basic requirements of a contract.

Asked on 12/16/21, 8:21 am

1 Answer from Attorneys

Timothy McCormick Haapala, Thompson & Abern, LLP

If there is no contract in place at this time the parties are free to bargain for whatever terms they choose. There is nothing inherently illegal about negotiating for contract terms to be retroactive or to insist on rebates based on past events as a term of a new contract. It may or may not be a bad faith negotiation to demand retroactive benefits of a contract they let expire, but that’s not illegal. You are free to walk away from the deal and decline a new contract if you don’t like their terms.

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Answered on 12/17/21, 12:02 pm

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