What is a Contract Addendum?
A Contract Addendum is a document that adds or amends clauses of a signed contract. After signing the original contract, it is possible that the parties wish to change what they have previously agreed on, for example, a different pricing or some additional obligations that the parties did not foresee.
A Contract Addendum sets out clearly the changes to the original contract, and that apart from those changes the contract will remain in full force and effect.
How to create a Contract Addendum
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Writing a Contract Addendum
Here are some important points to remember while writing a contract addendum:
- Make sure you’re using the same text formats such as the fonts, margins, and style as in the original contract.
- Ensure that it is clear that the new document is an addendum with a new title whilst also mentioning the original as a reference with its name and date, included.
- Mention the parties involved in the contract.
- Mention the date from when the addendum will be in effect.
- Clarify the changes that the addendum wishes to make in the original contract.
- At the end of the document, do add a concluding paragraph so the addendum cannot be altered thereafter.
- Have a signature block with names and titles placed so both parties can sign.
- Place a notary block.
- If there has been more than one change on the contract, number the amendments.
Contract addendums vs amendments:
An addendum and an amendment contract are different. While an addendum makes new additions or clarifications to the original terms of a contract, an amendment modifies the terms of the contract. Following are some more differences between the two:
1. The effect of each on the contract
An addendum provides additional information to an original contract without nullifying its terms. It is a separate additional document from the original contract. On the other hand, an amendment makes changes to the existing terms of a contract. It is changed to the new terms which are agreed upon by both parties. It replaces the contract’s terms instead of adding new ones.
2. Application of the changes
While an addendum is added to an existing agreement as an additional document, an amendment makes direct changes to the original document itself.
An amendment must be executed by both parties involved. However, an addendum can be made by anyone involved.
For amendments, if there happens to be more than one in an existing contract, it will usually be redrafted to reflect the new terms For addendums, new ones can be attached to the original contract without requiring redrafting.
Laws Governing Contract Addendums
Addendums have to comply with the existing contract terms, else they will not be enforceable. Most contracts have specifics about the circumstances under which terms can be modified. While reviewing the original contract be on the lookout for terms that prohibit addendums. Check for details such as permission to change the contract without the other party’s consent, and other requirements for addendums. Ensure it is in line with applicable laws in your region.
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