Contract Amendment: Everything You Need to Know
A contract amendment is used whenever minor changes need to be made to a contract or agreement. 3 min read
2. Importance of Amendments
3. Importance of Contracts
A contract amendment is used whenever minor changes need to be made to a contract or agreement. The amendment is usually created when a condition of the contract or the terms are not working according to plan and require an adjustment. This could be something as minor as changing a due date.
Steps for Amending a Contract
When creating a contract amendment, it is not necessary for it to be in a formal format like the contract itself. It can be written in letter form or mimic the layout of the original contract. There is no specific form to fill out. The following information should be included.
- The names of the parties involved.
- The original date the contract was executed.
- The amendment's effective date.
- The portion of the contract being changed and why the change is being made, such as adding information, deleting information, or editing a portion of the content.
The following five steps lay out the basic information needed to create a contract amendment. If possible, when creating a separate document for the amendment, use the same font size, margins, and typeface for the amendment that was used in the original contract. This is only a recommendation for consistency and is not a legal requirement.
- In the introductory paragraph, include your name or business name and the other party's name or business name.
- The second section is where the information regarding the changes to the contract is input. There are three options for adding information: use redlines or strikeouts to denote the area(s) being changed; replace an entire section (use a separate document describing how a section is being modified and include the effective date); or just cross out the language that is no longer applicable and rewrite the new content. Each party must initial and date any changes and/or a separate document if one was created listing the changes.
- Include a paragraph that clarifies that other than the amendment, the original contract remains as written.
- Proofread the amendment followed by each party member printing, signing, dating, and listing their title. Be sure the person signing the amendment is authorized to do so. Also, make sure any requirements included in the original contract regarding amendments have been met. There may also be situations where additional signatures must be included, especially for corporate or financial amendments.
- Since a contract may undergo more than one amendment, it is recommended that each one be numbered. For example, use "Amendment No. 1" or "First Amendment." File each amendment with the original contract.
Importance of Amendments
Written contracts are an important part of a business. Without a contract in place, disputes would be handled strictly by one person's word over what another person has to say. Amendments may be considered as important as the original contract since they are the means to add forgotten terms or provisions or address issues made apparent once the contract went into effect.
When properly executed, an amendment is attached to the original contract and becomes part of the total package. Should those amendments not be added and issues arise, the original contract could be deemed unenforceable.
Importance of Contracts
Technically, a contract may be oral or in written form. When a contract is referred to, however, it is usually meant as a written document. An oral contract is most often referred to as an agreement.
Oral agreements are enforceable the same as a written contract, but there may be evidentiary issues should a dispute arise. When evidence relies on "he said, she said," proving an issue is difficult. Under some conditions, such as the purchase of real estate or terms/arrangements that are supposed to last for more than one year, oral contracts are not enforceable.
When creating a contract, it is always better to have a written contract and one that contains every portion and detail, no matter how large or small. In some situations where extensive changes need to be made to a contract, it may be easier to create a new contract rather than creating multiple amendments. Use the same language from the existing contract as a guide. This also makes creating a new contract easier.
If you need help with a contract amendment, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.