Key Takeaways

  • A contract amendment changes the terms of an existing agreement, while an addendum adds new terms without modifying the original content.
  • Amendments are best for correcting errors or updating clauses; addendums are suited for supplementing missing details or including additional parties or provisions.
  • Amendments generally require agreement from the original parties, while addendums can sometimes be created by third parties if acknowledged and accepted.
  • Both documents should be signed and dated, and referenced clearly in the original contract.
  • Incorrect use of amendments or addendums can result in legal disputes or unenforceable contract terms.

A contract amendment vs addendum are terms used when changing or adding to an original document. An amendment makes changes to an already existing agreement whereas an addendum adds an additional document to the existing agreement.

Overview of Amendments vs Addendums

An amendment may be referred to as an alteration since it is altering the original document, which may include supplementary information. An example would be the parties involved agreeing to extend the original terms or change the price for a product. Both constitute a change to the original paperwork.

An addendum is informational or explanatory notes added to and made part of the existing contract once all parties involved have accepted it. Addendums are usually items that were left out when the contract was being drafted. An example would be the parties wanting to add more language to the original document, such as when a person buying a home has signed the contract but then decides to keep the appliances being offered with the home.

Amendments are allowed to be made by the persons who signed the original document. An addendum can be created by persons other than the ones who signed the original contract. Amendments are considered part of a contract until it is next negotiated, while an addendum is a legal and binding part of the contract.

Whenever an addendum is created, it is recommended to write above the signatures on the original contract, "This document is not valid without the attachment of Addendum X"  (substitute the X with the corresponding letter, such as A, B, or C, or the number 1, 2, or 3, depending on the number of addendums you've added). Having an attachment alerts anyone looking at the original that there are other documents attached.

Written amendments have advantages over oral agreements. For example, the enforcement of an oral modification may be difficult. In some states, the law requires that certain types of amendments, such as financial contracts, be in writing. On the reverse side, even if a contract contains a clause requiring modifications to be in writing to be valid, they are not always enforced. Contracts may not be enforced even with a clause, but this doesn't mean oral amendments, requiring written modifications, or adding clauses should be prohibited. 

Situations occur when the parties to an agreement want to deviate from the agreement but it does not need to be modified. This could happen when one party gives permission to another party to share information with other people even though the language in the contract prohibits this action. Granting permission or waiving a provision is sometimes considered an amendment, although it is more aptly defined as "consent" or a "waiver."

An amendment modifies the agreement, but a consent or waiver excuses or permits the action to take place even though the contract prohibits it. It is recommended that waivers and consents be put in writing.

Risks of Using the Wrong Document

Improperly using an amendment or addendum can lead to confusion, unenforceable terms, or contract disputes. For instance:

  • Amending a contract when an addendum is more appropriate may unintentionally override important original provisions.
  • Failing to get proper consent for an amendment can make it legally invalid.
  • Overusing amendments for minor clarifications may clutter the contract and cause misinterpretations.

Maintaining a clear and well-documented change history—whether through amendments or addendums—helps support legal enforceability and avoids ambiguity.

Legal Considerations for Each Approach

From a legal standpoint, both amendments and addendums must meet basic contract requirements to be enforceable:

  • Mutual consent: Both parties must agree in writing to the change or addition.
  • Clarity and specificity: The document must clearly reference the original contract and specify the exact nature of the change or addition.
  • Execution and dating: It should be signed and dated by all required parties, often with the same formality as the original contract.

In complex or high-value contracts, it is advisable to consult legal counsel before making modifications to ensure compliance and avoid unintended legal consequences.

When to Use an Amendment vs Addendum

Choosing between an amendment and an addendum depends on the nature of the change being made:

  • Use an amendment when modifying an existing provision in the contract. This could include changes in pricing, dates, deliverables, or obligations.
  • Use an addendum when introducing new terms or details that were not part of the original agreement, such as including a new party, adding scope details, or supplementing contract requirements.

For example, if a service contract initially lacked a confidentiality clause, an addendum can be used to insert one. However, if the delivery date in the same contract needs to be changed, an amendment is appropriate.

Creating an Amendment

When creating an amendment, it is important that the language is clear, concise, and specific. The document can be in an informal format, such as a letter, or it can be created to resemble the format used in the original contract, including the same font and layout.

Three different styles are generally used when creating an amendment. 

  • Method #1: When using this method, any changes to the contract are shown visually using redlines and strikethroughs. For example, an addition is signified by an underline, and deleted text is crossed out using the strikethrough option in a word processing program. It is common practice to precede the amendment itself with a clarifying statement describing the process used to create/draft the amendment. The statement would note that additions would be indicated by an underline and that deletions would be indicated with a strikethrough, followed by the section being modified such as Section 7. Then, the amended information would be added.
  • Method #2: If a clause is being completely replaced, simply state which clause is being replaced. Then, add the new clause in its place.
  • Method #3: With this method, the portion of the amendment being changed is described. While this method is less time consuming, the parties need to verify the changes made to the existing contract. An example would be: "The date in the last sentence of the first paragraph is being modified from 'December 1' to 'April 1.'"

Creating an Addendum

Creating an effective addendum requires the same attention to detail as an amendment:

  1. Reference the original contract – Clearly state the name, date, and parties to the original agreement.
  2. Label the document – Title it "Addendum to [Contract Name]" and include a unique identifier if there may be multiple addenda.
  3. Describe the new terms – Detail the new provisions or supplemental terms being added.
  4. State the relationship – Affirm that the original contract remains in effect except as modified by the addendum.
  5. Obtain signatures – All original parties should sign the addendum, and any new parties introduced should sign as well.

Best practice also includes attaching the addendum directly to the original agreement and noting it in a cover page or index if applicable.

Frequently Asked Questions

  1. What is the main difference between an amendment and an addendum?
    An amendment modifies existing terms of a contract, while an addendum adds new terms without changing the original ones.
  2. Can an addendum override a contract clause?
    No, an addendum adds to the contract. To override a clause, an amendment should be used.
  3. Do both parties have to sign an amendment?
    Yes, all parties to the original contract must consent to and sign the amendment for it to be valid.
  4. Can you have multiple amendments or addendums?
    Yes, multiple amendments or addendums can be added over time. Each should be clearly labeled and dated.
  5. Is it legally necessary to use a separate document?
    While verbal agreements may sometimes be binding, written amendments and addendums are preferred for legal clarity and enforceability.

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