Addendums To Contracts: Everything You Need to Know
Addendums to contracts are modifications added to an existing contract to add or alter a few of its terms and conditions. It doesn't replace the original contract but rather affects only the specific parts of the agreement where it is applied.3 min read
Updated July 10, 2020:
Addendums to contracts are modifications added to an existing contract to add or alter a few of its terms and conditions. It doesn't replace the original contract but rather affects only the specific parts of the agreement where it is applied. Do note that if modifications to an existing contract weren't integrated through a separate document, it is called an amendment, not an addendum. On the other hand, a contract addendum contains the terms or any section of the original contract that need to be modified, signed by all parties involved.
Writing a contract addendum is a bit tricky, but as long as the goal of writing it is established, then it will be a straightforward work. Just be reminded that changes will only be necessary to sections where all parties want a change to avoid ambiguities or unplanned consequences.
How to Write a Contract Addendum
There are effective ways to write a contract addendum, and here are few tips on getting one done.
- Utilize a consistent style in relation to the original contract. Using the same font, size, margins, and other formatting tools make the original document and the addendum connected. Always reference all dates in the original contract. Create a title that clearly shows the relation of the addendum and the original contract like "Addendum to January 1, 2017, Employment Contract."
- State the parties in the contract. Restate both parties on the addendum as detailed in the original contract.
- Effectivity Date of the Addendum. The effectivity date of the addendum should be clear, in the same format, and placed in the document similar to how it was mentioned in the original document.
- List of Terms and Sections of the contract to be modified. For a clearer understanding of everyone reading the addendum, the affected terms and parts of the contract should be enumerated with the corresponding modifications. To highlight modifications, additions, or deletions, it is recommended to use strikethrough or bold formats. In addition, don't forget to attach the original contract in the addendum to avoid confusions with regard to what contract the addendum modifies.
- Signature Block. This will be the section where the signatures and date signed by the representative of each party will be affixed. Don't forget to include a printed name of the representatives as well as the date of signing.
- Notary Block. To prove that the signatures are true and correct, it should be notarized, and the notary block section will serve for that purpose.
Ensuring Your Addendum is Enforceable
Contracts have basic elements for it to be enforceable and addendums have also their own checklist to be met for them to be imposed by law.
- Mutual Agreement. A valid addendum requires the mutual assent of parties involved. This entails that all parties must fully understand and agree to all vital sections of the addendum. After drafting the addendum, a copy should be sent to all parties for checking and review. One needs to ensure that both parties have known their new obligations and rights under the addendum.
- Signatures of all parties. Unless stated in the original contract, signatures of the same individuals who signed the original contract are required for the addendum to be enforceable. This will ensure that all parties agreed to have the necessary modifications to the original contract they've signed. In case one of the signatories is not available, an agent can affix his signature given that the original signatory has authorized him to sign on his behalf.
- Exchange an additional promise or asset. In some cases, the addendum needs an additional exchange of consideration to be imposed under law. Consideration is a benefit that both parties expect from a contract. Some of the contracts that need additional consideration for the addendum to be binding are an employment contract, business agreements, and leases.
Real Estate Contract Law - Addendum or Amendment
One area where amendment and addendum are usually interchanged and incorrectly used is in real estate contract law. The two can be used to modify the terms of a purchase agreement or a real estate contract, but it's the matter of when you're doing it that dictates which are used. For purchase agreements or real estate contract, an addendum is a document attached to the original contract at the time it is prepared and given to the principals. On the other hand, the amendment is a modification later to the terms of an already-approved contract.
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