Key Takeaways

  • A contract change refers to any alteration to the terms of an existing agreement and must be agreed upon by all parties.
  • Changes can be made before or after contract execution, provided the agreement allows it and proper procedures are followed.
  • Common reasons for modifications include adjustments in pricing, scope, deadlines, and legal requirements.
  • There are both formal and informal methods to implement changes, including change orders, amendments, and bilateral/unilateral modifications in government contracts.
  • Best practices for managing changes include documentation, transparency, version control, and legal review.
  • In government contracts, FAR Part 43 defines strict processes and change types like administrative changes, unilateral changes, and bilateral modifications.
  • Contracts may also contain pre-agreed mechanisms for future changes, especially in long-term or high-risk arrangements.

Changes to a contract, or a contract modification, can occur when one or both parties need or want to make adjustments to a legally-binding agreement. Such modifications can be made either in writing or verbally, and can be done prior to all of the involved parties signing the contract, or even after. Additionally, contract modifications can be applied to the contract in it’s entirety, or just to certain sections.

Any modifications that are made to a contract must be agreed upon by all of the involved parties, just as the initial contract needs to be agreed upon by all parties. Assuming that all parties are in agreement, then the modifications will be enforceable by law, just as the original contract itself would be. However, if there are parties who are not in agreement to the modifications, then it may not be possible to enforce said modifications.

Reasons for Contract Modifications

There are any number of reasons as to why one or more parties may want to make changes to a contract. Some of these reasons include:

  • Extend the length of the contract
  • Change the duration of the contract
  • Alter certain requirements under the contract, such as the number of items being requested
  • Change certain terms within the contract, such as payment date, amount, dates by which goods and services are to be received, etc.
  • Add or subtract terms within the contract

Additionally, there are other circumstances under which a contract may be modified. In fact, in some cases, by signing the original contract, you may be agreeing to future contract modifications. For example, your mortgage lender may have included language in the contract giving them the right to change your interest rate down the road. By having signed that contract, you are agreeing to potential future contract modification.

Types of Contract Changes

Contract changes can take many forms, depending on the structure of the agreement and the nature of the change. Common types include:

  • Additive Changes: Increases in scope, services, or compensation.
  • Deductive Changes: Reductions in the scope of work, quantities, or price.
  • Substitutions: Replacing one part of the agreement with another, such as changing a supplier or delivery method.
  • Time Extensions: Modifications that extend deadlines or project timelines.
  • Legal or Compliance Updates: Alterations to address changes in the law or industry regulations.

Some contracts—especially in government and construction—may include predefined change order processes to streamline these updates.

When Can Contract Modifications Occur?

Modifications to a contract can essentially take place at any time, assuming that all parties are in agreement, although it is easier to make modifications before the contract has been signed. Additionally, provided that the modifications being made are relatively minor (and, all parties involved are okay with this), the changes can even be handwritten on the original contract, and then dated and initialed by the individuals involved. If the changes being made are larger in scope, thus potentially changing the overall integrity of the agreement, it is best to have a new contract drafted, which will then be reviewed and signed by the parties involved.

Some initial contracts may include language regarding the process to follow, should modifications need to be made. If that is the case in your contract, then you and the applicable parties will need to ensure that those protocols are being followed in order to ensure that the modifications are enforceable.

Just as there are things to consider and look out for, when you sign an initial contract, you will want to keep some things in mind before agreeing to, or signing, any contract modifications, including:

  • Do any of the provisions being proposed feel, to you, at all unfair or biased?
  • Are your suggested modifications (if you have any) being included, or at least discussed?
  • Is the wording of any modifications clear to you; are you clear on the proposed changes?
  • Have you already begun working on meeting the terms and conditions of the original contract, and if so, will these modifications put you in a tough spot with continuing to uphold your end of the agreement?
  • Are you prepared for multiple rounds of contract negotiations, should all parties not be in agreement to the initial modifications that are proposed?
  • Is the new contract, or the modifications, still in accordance with the contract laws of your state?

Just as you may want to seek legal counsel before signing a contract, it is advisable to do the same when it comes to making contract modifications, as there are any number of variables to consider.

Contract Change Procedures and Best Practices

Managing contract changes efficiently helps avoid disputes and ensures accountability. Best practices include:

  • Clearly Define the Process: Establish how changes will be proposed, reviewed, and approved in the original contract.
  • Use Written Amendments: Always document changes in writing and obtain signatures from all involved parties.
  • Maintain Version Control: Track changes with dates, version numbers, and updated clauses.
  • Communicate Transparently: Keep all stakeholders informed to ensure alignment and compliance.
  • Seek Legal Review: Consult an attorney to verify that the modification complies with applicable laws and doesn’t expose your business to liability.

For organizations managing multiple contracts, a contract lifecycle management (CLM) system can help automate tracking and approval of contract changes​.

When Can Contract Modifications Not Be Made?

While there are plenty of times in which you may make modifications to a contract, there are also those times in which it may not be legally permissible. The most obvious among these are if the initial contract contains language that clearly states that modifications cannot be made. Provided that the contract is not in violation of contract law, then all parties will be expected to honor the terms and conditions.

Risks of Informal or Improper Contract Changes

Improperly executed contract changes can lead to misunderstandings, legal challenges, and unenforceability. Common risks include:

  • Lack of Written Agreement: Verbal agreements are hard to prove and often unenforceable.
  • Unauthorized Signatures: Only individuals with contractual authority should approve changes.
  • Failure to Update the Entire Contract: Overlooking necessary updates in other related clauses.
  • Inconsistent Language: Ambiguity in the modification terms can lead to disputes.

To avoid these issues, businesses should create a standardized change control process and train staff on its application.

Government Contract Changes (FAR Part 43)

In U.S. government contracting, contract changes are governed by the Federal Acquisition Regulation (FAR) Part 43​. These include:

  • Bilateral Modifications: Changes signed and agreed to by both parties.
  • Unilateral Modifications: Issued by the contracting officer without requiring contractor agreement, typically for administrative changes or exercising options.
  • Change Orders: Written orders that direct a contractor to make a change within the scope of the contract without immediate agreement, subject to later negotiation on price and schedule impact.

FAR procedures ensure that even unilateral changes comply with legal frameworks and include remedies for the contractor, such as requesting equitable adjustments.

Frequently Asked Questions

  1. What is a contract change?
    A contract change is any modification to an existing contract’s terms, such as scope, pricing, or deadlines, requiring mutual agreement unless otherwise permitted.
  2. Can a contract be changed after it is signed?
    Yes, provided all parties agree and any procedures outlined in the original contract are followed.
  3. What’s the difference between a change order and an amendment?
    A change order typically applies to project-based contracts (like construction), while an amendment formally alters the terms of a general contract.
  4. Are verbal contract changes enforceable?
    Generally no—especially for contracts governed by the Statute of Frauds. Written modifications are strongly recommended.
  5. How do government contract changes work?
    Under FAR Part 43, changes may be made via bilateral or unilateral modifications or change orders, depending on contract type and authority.

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