As they always say, nothing is permanent in this world except for change. Even in legal contracts, an adjustment can happen anytime, even after both parties have signed it. This is called a contract addendum.
So what happens if you need to change something in the contract? Read below to learn how to create a contract addendum.
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10 Common Situations That May Need A Contract Addendum
So what instances call for a contract addendum to be made? Here are 10 of the most common situations where contract addendum creation is needed:
Changes in the scope
When there is a change in the scope of work outlined in the original contract, you can draft a contract addendum so that the new change can be applied. You will need to get the addendum signed by both parties.
Changes in the price
You may also need to make a contract addendum if you encounter a price increase, especially in your raw materials. The updated contract can include details on the new price or additional costs added to the contract.
Situations may occur when you need to extend the deadline of the original contract timeline. You may face unexpected delays or unforeseen circumstances that are beyond your control. In either scenario, a contract addendum can help extend the deadlines.
Change in the deliverables
You can also draft a contract addendum if you need to add or remove deliverables or services that you previously included in the original contract. Use the addendum to clarify the revised scope of work.
Change in responsibilities
When you need to leave an ongoing project because of an unforeseen circumstance, you can prepare a contract addendum to redistribute the responsibilities in the contract.
Payment term changes
Whenever a new payment method or schedule is added, you will need to include the information in the contract addendum. This helps make sure that everything is legally documented.
Governing law changes
You will also need to prepare a contract addendum if there are some changes to the jurisdiction or governing law that covers the contract. This is
Addition of non-disclosure or confidentiality terms
If any confidentiality or non-disclosure provisions are missing from the original contract, you can make a contract addendum to introduce such clauses.
Resolution of disputes
When you need to add some alternative dispute resolution methods that the original contract failed to address (like arbitration or mediation), you can make a contract addendum to make necessary changes.
Modification of the termination clause
Lastly, if you need to extend the notice period or add in some termination conditions, you will need to prepare a contract addendum for these changes to be applied.
Whenever you are writing a contract addendum, make sure to have the document signed by all parties so that the new changes can be enforced.
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What to Include When Writing A Contract Addendum
Now that you know the usual scenarios where a contract addendum is needed, the next step is to learn how to draft a contract addendum. Here are some things you need to include in your draft:
- Heading – The document should have a heading that reads “Contract Addendum” or “Addendum to [Contract Title]” on top.
- Original Contract Reference – The reference number of the original contract should be clearly stated in the addendum. This way, the changes are properly linked to an agreement that already exists.
- Parties – The names of the people involved in the contract should be included. Their full legal names and addresses should be written in the contract. Include the same names and roles from the original contract.
- Purpose – Identify the purpose of the addendum and what it aims to change.
- Detailed Changes – Document the changes being made in a clear yet concise manner. Be specific about the clauses or sections from the original contract that are being modified.
- Effectivity Date – The addendum should also include the effectivity date, which could be the same as when all parties sign the addendum.
- Integration Clause – Write a statement confirming that the other terms and conditions from the original contract remain in full force and effect. The only ones that are modified are the ones expressed in the addendum.
- Signature Block – Provide enough space for the parties in the contract to affix their signature and the date they signed it. Include a line for the full legal names and their titles below the signature block.
- Witness or Notary – Leave space for a witness or a notary public to sign or affix his official seal.
- Notice Provision – It’s also a good practice to include a notice provision specifying how both parties will communicate future notices related to either the original contract or the addendum.
Best Practices When Writing A Contract Addendum
Now that you know how to write a contract addendum, you must know some of the best practices to ensure that your draft is accurate and enforceable. Here are the basic things you should practice when drafting a contract addendum:
- Use clear and precise language – Clearly describe the additions or changes being made. Don’t use vague or overly complicated words that may be open to disputes or misunderstanding
- Make sure you reference the addendum to the original contract – Reference the addendum to the original contract by including the title, date, and the individuals involved.
- Be specific about the changes – Make sure to state the specific clauses, provisions, or sections from the original contract that you are modifying. Write detailed information about these changes.
- Be consistent – Use language that is consistent with the original contract’s style and terminology. This will help you stay coherent and avoid any confusion later.
- Incorporation by reference – Remind the reader that the terms of the original contract will continue to be in full force and effect, except for the ones being modified in the addendum.
- Obtain a signature – Make sure that your contract addendum has been signed by all parties involved so that these can be in effect.
- Have a legal professional review your draft – This is the most important practice that you should not forget. Make sure that your draft has been reviewed by a legal professional to ensure it is compliant with applicable laws.
Utilizing Fill For Your Contract Addendum
When you need to create a contract addendum, you can use one of Fill’s templates to help you out. Our contracts have been carefully designed to make your contract-writing process a breeze.
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