Contract Alteration: Everything You Need to Know
Contract alteration occurs after a contract is signed but one party seeks to modify the key points of the contract with/without the consent of the other party.3 min read
Contract alteration occurs after a contract has been signed but one party seeks to modify the terms or key points of the contract with or without the consent of the other party. The effect of contract alteration is that, legally, a new contract has been created because it no longer reflects the intention of the parties at the time the original contract was signed.
It is not illegal to alter a contract once it has been signed. However, it must be materially changed, meaning that if an important part of the contract is altered by the change, it must be made by mutual consent of both parties. If only one party modifies the contract without the agreement of the other, then it is unlikely the changes will be enforceable.
Effect of Altering or Modifying a Contract
If a contract includes language that describes the process for modifying the terms or conditions, and those procedures are followed, contract law decisions have determined that those changes are valid. Thus, the parties will proceed to act under the modified terms of the altered contract. In effect, it’s a new contract.
To be considered a modification or alteration of a contract, the changes must appear directly on the signed legal document. It might appear as a change in the handwriting of a signatory to the agreement, or words may be erased or crossed out.
Whatever the change, it must significantly revise the intention of what the original document established. As a result, if agreed to by competent parties to the contract, it releases the original signers from the obligation contained in the original document.
However, if the modification has been performed with the consent of both parties, it does not hold the non-consenting party liable for the changes. Even if the non-consenting party changes the document back to reflect the original intention by deleting the unauthorized modifications, the contract is still considered invalid. A new contract must be created.
Examples of Contract Alterations
To be considered an alteration or modification, a change must be material, meaning it must impact the overall meaning of the language, revise the intent of an important section of the contract, or affect the rights of the parties to the agreement. Examples of material alterations include:
- A change to any dates existing in the document, including the date of execution, which revises the time frame under which the duties of the contract will be performed. This is especially true if it affects payment terms or performance schedules.
- If the signature of either party is erased or replaced by a new signature. In addition, if any language that indicates that the signatory is authorized to act on one of the party’s behalf is changed, it is considered a material change. However, if that signer was never given authority to sign the document in the first place, then the change is not deemed to be material.
- When the obligations of either party to the other are changed. Commissions promised or payment schedules established between parties cannot be legally altered without the consent of both parties.
- Any changes in the description of the goods or services that are involved in the transaction are deemed material. For instance, if the property described in a mortgage or deed is made larger or smaller, or if the days of a week when services are to be performed changes, then it is a material modification.
In most cases, the intention behind any contract alteration is not important. However, if the modification was made with the intent of one party to defraud the other, the contract is considered invalid and the damaged party may seek a remedy in a court of law.
If you suspect that a contract you have entered into has been altered without your consent, it is highly recommended that you seek the counsel of an experienced contract attorney. The attorney should be able to advise you of the best course of action, whether it is to agree to the modifications, negotiate new terms, or take legal actions against the other party. It is better than being forced to adhere to unfavorable terms.
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