LEGAL DICTIONARY

Contract Amendment

A contract amendment is a mutually approved change of an active legal agreement. This may be carried out to update or alter the terms or clauses of the current contract so that the agreement can continue without issues.

Of course, legal contracts can only be amended under certain circumstances and signatories must make sure they follow the correct procedures to avoid invalidating the agreement. Knowing how this works is crucial for any of the parties bound by the contract who wish to make the changes.

When Should a Contract Be Amended?

Contract amendments usually happen when something about the drafted and signed agreement needs to change. This is either because the original circumstances have shifted or a party wishes to make alternations due to mistakes in the text.

When this occurs, the amendment allows you to update the terms, clauses, dates, sections, and definitions if any of them aren’t up to standard. This lets you ensure the agreement properly reflects the real situation between the parties.

How to Amend an Active Contract

Amending a contract is a formal procedure and you must make sure that you follow the right steps to do so. The first and most important step is to speak to the other party (or parties) bound by the agreement, to ensure that they agree to any changes.

When approaching the other party, it is important to do so in writing, making reference to the title and date of signing of the first document. You will also need to carefully and specifically explain what changes are needed.

If both parties are in agreement the following kinds of modifications can be made:

  • Deletions
  • Additions
  • Corrections

When this new draft of the contract is completed, the other parties should be consulted with the amended text. This allows all parties to check over the new version to ensure that they are happy with the language in the new agreement. They may also propose significant or minor modifications to these alterations.

Remember, amending agreements in this way should also ideally happen before the signing of the original document. This allows the parties to review the terms of the contract and make written or requested suggestions and modifications before putting the final agreement into full effect.

To formalize the amendments, all parties named on the agreement must sign the newly altered contract. It will then become fully active, replacing the original document.

Amendments Vs. Addendums

Amendments are quite different from addedums in contracts, however, both can significantly change the contents of an agreement. The fundamental difference is that amendments change the original document, whilst addendums add extra pages of up-to-date information without any redrafts to the initial text.

An addendum on the other hand is an entirely separate document that contains overriding language that is added to the contract. These modifications are usually more intricate, far-reaching and legally significant. Like amendments, they are legally binding once signed.