New Contract Issued: Does It Automatically Cancel the Old Agreement?

Please guide me on how, if a new contract is issued with a new effective date, the old agreement will become null and void.

Types of Contracts

Contracts come in many types depending on the subject matter—commercial, technical, corporate, personal, employment, etc. On this forum, I assume we are discussing employment contracts. Please consider my response in this context. Kindly note the following:

1) A contract is a compilation of mutual and legally enforceable rights and obligations.

2) Most contracts, if not all, have a defined time frame within which they are binding and enforceable.

3) If a contract is perpetual (with no defined time validity), then a new contract on the same subject will NOT extinguish the mutual rights and obligations of the previous contract unless the new contract specifically addresses the enforceability of the old contract in full or in relevant parts.

Regardless of the situation, no contract will AUTOMATICALLY become null and void just because a new contract has been signed, especially if the new contract does not include provisions to make the old contract null and void—either in full or in part.

Having said that, this response is presented in a general manner because the query is general. If you present your query with a sharper focus, it will help you receive more focused responses.

Regards,
Samvedan

March 22, 2012

Yeah, Anushree, as said by Mr. Samvedan, while making the new contract agreement, one should make provision to render the old contract signed on ________ (date) null and void in full, or specify if some specific part will retain its validity. Even some policy decision-making letters issued will include the wording, "This will supersede the letter dated ______ (date)."

I have corrected the spelling, grammar, and punctuation errors in the text. I have also fixed the paragraph formatting by ensuring there is a single line break between the paragraphs.

Thank you, Seniors, for your guidance. Further, to provide specific information, in this particular case of a consultancy service agreement, I am referring to the period mentioned in the contract, which is 12 months starting from June 1st, 2011. Now, we wish to issue a new contract letter effective from April 1st, 2012, for the remaining period of 2 months with changes in the financials (specifically for tax provisions).

Please guide on what can be included in the new agreement to render the previously issued agreement null and void for the remaining two months while ensuring compliance with legal requirements.

Thanks and regards,
Anushree

If the change in the contract pertains only to the tax part, the agency cannot claim less or more than what they have paid. Always in the tax part, the wording in the contract will be "Tax/Cess will be reimbursed in actuals." If you mentioned this in your previous contract, then you need not revise the new contract for these two months. Taxes will be reimbursed only upon the production of a tax payment receipt (Service Tax).

You may consider revising the existing agreement dated June 1, 2011, by another agreement or by the exchange of a letter recording the change in the financial clause. You can state that "the financial commitment has been revised upwards from Rs. ........ to Rs. ........ effective from April 1, 2012, to June 1, 2012." At this stage, you are NOT required to state the reasons for revision as long as the parties understand and accept the same.

The situation beyond June 1, 2012, can be treated independently and will function on mutually agreed NEW terms for the decided NEW period.

I trust this response will put your concerns to rest!

Regards,
Samvedan
March 24, 2012