Prolongation of the lease agreement

The term “prolongation” in the Civil Code of the Russian Federation (hereinafter referred to as the Civil Code of the Russian Federation) is not used at all, but is often used in legal practice in drafting contracts as a synonym for the term “renewal”, and is an extension of the term of the contract, bill of exchange, loan or credit.

According to the prevailing judicial practice, if the parties stipulated that after the expiration of the lease agreement, it is prolonged for the same period, but did not indicate the number of renewals, this is permissible only once, after which the agreement can be renewed for an indefinite period according to the rules of paragraph 2 article 610 of the Civil Code. 

The court proceeds from the fact that according to paragraph 2 of article 621 of the Civil Code of the Russian Federation if the tenant continues to use the property after the expiration of the contract in the absence of objections from the lessor, the contract is considered renewed under the same conditions for an indefinite period (Article 610 of the Civil Code of the Russian Federation).

At the same time, in accordance with Art. 431 of the Civil Code, when interpreting the terms of the contract by the court takes into account the literal meaning of the words and expressions contained in it. The literal meaning of the terms of the contract in case of ambiguity is established by comparison with other conditions and the meaning of the contract as a whole. Or else, the true common will of the parties must be clarified, taking into account the purpose of the contract. This takes into account all relevant circumstances, including the negotiations and correspondence preceding the contract, the practice established in the mutual relations of the parties, customs, and the subsequent conduct of the parties.

Thus, in order to dispel all doubts about the renewal of the contract, it is recommended to clearly state all the conditions that will be agreed by the parties. In particular, to use such constructions as “The number of renewals is unlimited”, if the cooperation is assumed to be long-term (for example, “If 30 (thirty) days before the expiration of the Agreement, neither party declares termination of the Agreement, then the Agreement is considered extended for the next 12 ( twelve) months under the same conditions, while the number of renewals is not limited "), or" ... upon expiration of which the contract is terminated "if a one-time renewal is expected.
 

 

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