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The Option To Extend The Term Of The Contract is a crucial document in Philippine business practice, typically used when parties wish to build flexibility into their contractual relationships while maintaining legal certainty. It is commonly employed in various commercial contexts, including lease agreements, service contracts, and supply arrangements. This document becomes relevant when parties want to preserve the possibility of continuing their contractual relationship beyond the initial term without immediately committing to a longer duration. It must comply with Philippine Civil Code requirements, particularly Articles 1305, 1308, and 1315 regarding contract formation and modification. The document typically specifies the extension period, exercise notice requirements, conditions precedent, and any terms that may be modified during the extension period, providing a comprehensive framework for contract continuation.

1. Parties: Identification of all parties to the agreement, including their legal names, addresses, and company registration details if applicable

2. Background: Context of the agreement, including reference to the original contract and the parties' intention to create an option to extend its term

3. Definitions: Key terms used in the agreement, including 'Original Contract', 'Option Period', 'Extension Term', and 'Exercise Notice'

4. Grant of Option: Clear statement granting the option to extend the contract term, including the number of extension periods available

5. Exercise of Option: Procedure for exercising the option, including timing and format of notice requirements

6. Extension Period: Details of the extension period(s), including duration and any variations to original terms

7. Conditions for Exercise: Prerequisites that must be met before the option can be exercised (e.g., no defaults, performance requirements)

8. Financial Terms: Any adjustments to fees, charges, or payments during the extension period

9. Governing Law: Confirmation that Philippine law governs the agreement

10. Execution: Signature blocks and execution formalities