Contract Amendment Format: Everything You Need to Know
A contract amendment format is followed when more than just a minor change in language or a simple waiver or consent is required in an existing contract.4 min read
A contract amendment format is followed when more than just a minor change in language or a simple waiver or consent is required in an existing contract. A contract amendment is a significant alteration to the original contract, such as an addition, deletion, or major revision to the language, that does not require rewriting the contract from scratch.
It is always a good idea to make any change to an existing contract in writing, rather than merely accepting the change verbally. However a contract amendment, while not revoking the entire agreement, signifies that both parties have agreed to more comprehensive revisions that could affect the overall intent or terms of the contract.
Advantages to a Contract Amendment
It’s not difficult to see how a contract can save you both time and legal costs. It’s more than likely that a great deal of effort and negotiation has gone into creating the contract that was agreed upon between yourself and another party.
A contract amendment is also known as a contract addendum, amending agreement, or simply an addendum. Many contracts include a modification of contract clause that requires all amendments to be made in writing. Regardless of the terminology, they all provide the same benefits:
- You can amend as many provisions or terms as desired. So if you have a contract that for the most part you are happy with, there’s no need to go back to the drawing board and reopen discussions over every term and provision.
- A contract amendment to an existing contract can also help avoid confusion about which contract is relevant and what was agreed to when. Keeping it all in one document keeps things simple.
- A contract amendment provides adaptability for unplanned or unseen circumstances. It can be as simple as a change in date of promised delivery or a minor alteration to a clause in an agreement with an independent contractor, or it can be a major change to the terms of employment, a job specification, or even a rental agreement.
What to Include in a Contract Amendment
As is the case with any contract, both parties should sign off on the amendment(s) being made to the existing contract. A contract amendment is a new, separate document attached to the original contract. In addition, the following components should be part of any contract amendment:
- Parties to the agreement. If the parties change, a new contract is recommended.
- Reference to the original agreement. For example, “Re: independent contractor between John Doe and Jane Doe,” or “Re: employment agreement between John Doe and ABC Corporation.”
- Reference to the part of the contract being changed or language revised or deleted.
- New information that is being added, whether a new date or a complete clause.
- Titles or roles of the signatories.
When Not to Use an Amended Contract
There are occasions where it can be simpler and more efficient to create a new contract, even though in principle the agreement between you and another party is not changing:
- Relocation to new property. Even though it may only be a matter of adding a new address, payment amounts, or security deposit terms, it’s still probably best to start over with a new lease rather than amend an existing contract.
- When an agreement has practically been reached, but at the last minute terms change before the contract has been signed. Technically speaking, you can’t amend a contract that hasn’t been executed. Start afresh with the new terms in the original document from the outset.
- If the changes desired are so involved as to essentially create a new contract, then it’s a good idea to just tear up the old agreement and create an entirely new document.
Valid Contract Amendments
Although there are not general formats that amendments must adhere to, and they do not have to be as formal as the original contract, three types of contract amendments are usually upheld under legal scrutiny:
- Changes directly on a contract: This is the least formal method of amending a contract. Also known as a strikethrough or redline amendment, it involves merely crossing out the unwanted language, entering new language, and both parties acknowledging the revisions.
- Use a separate document to replace a significant clause. This tends to be the most efficient method to avoid confusion in the future.
- Create a formal document that details exactly how a clause or provision is to be modified rather than rewriting the clause or provision in its entirety.
Despite the best intentions and most detailed amount of planning, changes can happen in any agreement between two parties. Contract amendments are the simplest way to respond when change occurs.
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