Contract Amendments | When to Use Them, Creation, and FAQs

Last Updated: June 19, 2020

Over time, a business agreement may need to be updated or modified. In contract law, we refer to these changes as “amendments.” There are several reasons an existing contract may need to be amended, and it is not a bad thing, it is actually very important. If an agreement is not correctly amended and there is no record of such change, it can be challenging to prove that the parties to show the new terms.

An amendment to a contract the original agreement and updates the prior terms of the contract. Original contracts are also amended because the parties have decided to negotiate new terms to update the existing agreement. 

When Should a Contract be Amended?

A contract should be amended when either party wishes to make changes to the agreement’s current terms. Proposed amendments should be discussed and agreed to by all parties to the contract. Once the parties have agreed to the new terms, the amendment should be in writing and signed by the parties. Without the permission of the other party to change the terms of the contract, that part of the agreement may not be enforceable. 

What about Contract Amendments Before Signing it?

Sometimes parties have minor changes before signing a contract. In these situations, the parties can strike through part of the agreement, and the changes can be made by hand. However, each party to the contract needs to initial by the handwritten modification to illustrate their acknowledgment of the change.  

What is the Difference Between a Contract Amendment and Contract Addendum?

Although the two terms may sound the same, it is important to know the difference between the two. For example, a contract amendment modifies the actual terms of the agreement, such as the price of widgets you purchase from Widget Express. 

A contract addendum keeps all of the terms of the original contract and adds new ones. A good example of a contract addendum is between a landlord and a tenant. Most leases contain a “pet addendum” which lists the type of animal and breed. However, if after the lease is signed, the tenant wishes to keep a new pet on the premises, the landlord will require a contract addendum where both parties agree to the new terms of the contract. The effective date of the addendum is the date both parties signed. At that point, that part of the agreement remains in full force unless replaced by another contract addendum. 

Do I need a New Contract? 

Sometimes, a new contract may be required. This usually occurs when there are several terms of the original agreement that need to be modified. A new contract may also be necessary if the scope of work in the existing contract is different from that of the proposed new project. A single amendment is usually added as a separate document to the original contract and expresses the new terms of the agreement. 

How Do I Draft an Amendment to a Contract?

There are many ways you can amend a contract. However, remember, it needs to be in writing, signed, and dated by all parties. Here are a couple of ways a legal agreement can be amended: 

  • Exhibit or addendum to the original contract
  • Drafting a formal contract amendment using a basic online template
  • Either way, the amendment should be attached to the original contract. 

Pro Tips For Creating a Contract Amendment 

When the parties wish to make changes to an existing contract, the new terms need to be memorialized and attached to the original agreement. Without the changes in writing, the new terms may not be recognized in a court of law. Moreover, the parties may not be bound by the new terms if they are not correctly demonstrated in writing. Here are a few helpful tips:

  • An amended contract should always be in writing! 
  • Be sure to reference the original contract, including its title. It is also beneficial to include the parties’ names and the initial effective date. This eliminates any confusion and clearly demonstrates the document is an amended agreement. 
  • If there are multiple amendments, it is best to draft a new contract. 
  • Reference the section of the contract being amended. Spell out if only part of the section is being modified or completely rewritten. The goal is to make the amendment as unambiguous as possible.
  • Attach the amendment to the original contract.

Do I Need an Attorney for Contract Amendments?

A lawyer can advise you on the changes you wish to make. They can walk you through any legal implications and provide their professional opinion. This is especially true if the parties plan to renegotiate the terms; a lawyer can be helpful to draft such changes. Sometimes contract amendments are not permitted. If a party does not agree to the proposed amendment and refuses to sign, the parties are still bound by the original contract. An experienced lawyer can provide guidance on proposed contract amendments. 

How Do I Get a Contract Amendment Signed? 

Contract amendments are usually short and to the point. They address only the parts of the contracts the contracting parties wish to change. ApproveMe’s WP E-Signature tool gets your contract amendments signed at lightning speed. The parties also receive a copy of the signed contract for their records. ApproveMe makes the signature process convenient for you and your business.

 

NEXT ARTICLE >>  Termination of a Contract

 

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