Contract Addendum: Everything You Need to Know
A contract addendum is added to the original contract or agreement as a separate document. It is used when the terms of the agreement are modified.3 min read
A contract addendum is added to the original contract or agreement as a separate document. It is used when the terms of the agreement are modified.
Information About a Contract Addendum
A contract addendum is also referred to as an addendum, an amending agreement, or a contract amendment. It is used when minor changes are to be made to the agreement or contract. The contract addendum is generally used to make adjustments when something is not working that is specified in the contract, such as a change in a date or the addition or removal of a clause.
When a contract addendum is handled correctly, the original contract should remain in full force with only the specific terms being modified affected by the addendum. It's important to note if changes are made to an existing contract without the benefit of a separate document that it is considered an amendment to the contract, not an addendum.
Examples of When to Use a Contract Addendum
You can use a contract addendum in the following situations:
- In the event a major change needs to be made to an existing job description in an employment contract, a contract addendum document outlining the change would be signed by both parties and attached to the employment contract.
- If you hired an independent contractor to complete a project by a specified date and the contractor was unable to finish the project by that date, an addendum could be added to the contract to extend the due date to complete the project.
- If you are in the position as a property owner with a signed rental/lease agreement by a tenant and the tenant agrees to do maintenance work on the property, you could incorporate an addendum with the new terms and attach it to the existing rental contract.
- In the case where changes that need to be made will have an effect on the overall structure and purpose of the contract, it may be a better option to create a new document.
Information in a Contract Addendum
When writing a contract addendum, the focus is to change only those sections that all parties involved want to change without creating situations within the existing contract that could result in unintentional consequences. As you write the verbiage for the contract addendum, be clear and concise in the wording and thorough in describing the modifications, as contract law can be tricky.
Perform the following steps to create a contract addendum:
- Create a title for the document that clearly explains an addendum is being added to the contract. An example would be "Addendum to (month-year-date) (original contract name)."
- Add the names of all parties involved who were named in the original contract. This includes organizations, individuals, or corporations.
- Use the same appearance as the contract. This means using the same font size, typeface, and margin settings as the original.
- Add the date when the contract addendum becomes effective once all parties have signed the paperwork. Place the date in the same location on the addendum as it is in the original contract. For example, it the date is at the top of the contract, place it at the top of the addendum. Also, reference the original contract date somewhere in the addendum.
- Include a description of the original contract's purpose along with the date it was initially signed.
- List the section of the contract being modified along with the original terms.
- Specify whether the addendum to the contract is a change, replacement, or addition.
- Include a signature block. The block should include space for the date when the addendum goes into effect, lines for parties to sign, and lines where the partys' names can be printed or typed.
- Add a block for a notary stamp.
- For clarity, highlight all additions using bold or italics. Use a strike-through to note any deletions.
Once all areas of the document have been signed, sealed, and dated, attach the original contract to the addendum. Note in the addendum that this step is being taken with verbiage such as: "The original (name of contract) dated (original contract date) is attached and made a part of this document." By adding this clarification, each party understands which contract the addendum is modifying.
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