Amendments To Contracts: Everything You Need to Know
Amendments to contracts are additions that are made after the contract has been signed by all parties. In order to make the addendum an official, binding part of the contract, it must be done according to legal procedures.3 min read
Amendments to contracts are additions that are made after the contract has been signed by all parties. In order to make the addendum an official, binding part of the contract, it must be done according to legal procedures.
Steps to Creating an Amendment
There are five basic steps in creating a contract amendment:
- Create an introductory paragraph that contains the name of the company, or your name, and the name of the other party in the contract. This can be either an individual or a business.
- Describe the amendment that needs to be made. You can include the section that needs changing and show the changes with strikeouts, you can replace an entire clause, or you can just describe the changes that you will make.
- Add a paragraph that states that besides this amendment, all of the rest of the contract stays the same as originally written.
- Look over your contract to proofread it, then sign it. Print all of the names of parties who will sign it, then add your signature and the day's date. If you have a specific title with the company or organization, print your title; all parties should do the same.
- Since a contract may have more than one amendment, be sure to number the amendment so you can keep track. File all amendments with the original contract.
Before all parties sign the amendment, make sure that everyone has the proper authority to sign, and that any signature requirements from the original agreement are followed in the amendment. The original contract contract may require that all original contracting parties sign all amendments, but other signatures may be needed as well.
Why an Amendment May Be Needed
You may need to modify part of an existing contract. This may involve adding provisions, deleting something, or making corrections. An amendment takes care of this problem. However, if the changes that need to be made are extensive, sometimes it may be better to create a new contract.
A contract amendment that replaces all previous agreements between the parties is called an “entire agreement” amendment. This includes any oral agreements. Any changes or additions to this document will only be enforceable if they are in writing and properly signed. However, the requirement that all changes should be in writing instead of using an oral agreement is often not enforceable in court, especially if oral agreements took place previously.
Additions, Waivers, and Consents involve a deviation from the agreement but no actual modification. A waiver is an agreement to temporarily grant an exception to the contract rules for a specific purpose.
If the contract is changed in some way before it is actually signed by all parties, these changes are not referred to as amendments. To make these modifications, just hand-write the change and have both parties add their initials.
Tips for Successfully Managing Amendments
Making multiple amendments can be tricky, and should be avoided if possible. This is especially true if there are amendments affecting a prior amendment. In this case, you may choose to create one single amendment which revokes all prior amendments and restates the changes that were ultimately made.
In order to avoid confusion, it's best to rewrite the entire contract provision or paragraph instead of just changing part of it.
Make sure that all contract amendment documents are dated and properly signed by the signers of the original document. Give all of these parties copies of the addendum, and also give copies to anyone else who was given a copy of the original contract.
Definitions of Common Terms
- Amendment: the means by which an original contract is modified. You may use the terms “amend” or “modify” but should avoid using “adjust” unless you are referring to numbers.
- Supplements: an addition to the original agreement that does not change the terms, but expands them to include something new.
- Settlement agreement: refers to a provision that is made to settle a dispute under the terms of a contract. These must indicate the nature of the dispute in a factual and objective manner.
- Restated agreement: adaptation of a contract to a new standard, clarifying contract provisions, etc. This is done by replacing the entire contract with the amendment.
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