Amending an Existing Contract
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If a contract already exists and you and the other party want to modify some element of it -- whether it's an addition (addendum), deletion, correction, or similar change -- an amendment is an ideal solution.
An amendment doesn't replace the whole original contract, just the part that's changed by the amendment (for example, the delivery date or the price for goods). If a contract requires extensive changes, it's generally wiser to create an entirely new agreement or, alternatively, to create an "amendment and restatement," an agreement in which the prior contract is reproduced with the changes included. Read on to learn more about amendments to contracts and how to use them. (To see what a contract amendment looks like, check out Nolo's Sample Amendment to Contract.)
Put Your Amendment in Writing?
Some contracts contain clauses such as the one below, which requires that any amendments be made in writing and signed by both parties.
Surprisingly, the requirement that modifications be in writing provided in the above clause is not always enforced. The reasoning, as expressed by one court, is this: Parties to a contract cannot, even by a written provision in the contract, deprive themselves of the power to alter or terminate that contract by a later agreement; so a written contract may be modified by the parties in any manner they choose. In other words, a contract clause requiring written amendments will not always be enforced. The chances of it being enforced go down if one or both parties relied on an oral modification in carrying out the contract.
This is not to say that you should disregard clauses requiring modifications in writing or prohibiting oral amendments -- or avoid using such clauses in agreements. Written amendments -- like written agreements in general -- have many advantages over oral agreements, and a party seeking to enforce an oral modification despite a clause prohibiting them will face an uphill battle in court. In addition, state law requires that some types of amendments must be in writing -- for example, amendments for transfers of real or intangible property and certain financial contracts must be in writing.
Amendments, Consents, and Waivers
There are times when the parties want to deviate from the agreement, but don't need to modify it. For example, one party to a nondisclosure contract might give the other party permission to disclose certain facts to certain people, even though that might technically violate the language of the contract. These deviations -- in which a party waives a provision or permits something that is otherwise prohibited by the contract -- are sometimes considered amendments, although they are more properly defined as "waivers" or "consents." Unlike an amendment, a consent or waiver doesn't modify the agreement itself; instead, it excuses or permits activities that are otherwise prohibited by the contract. Consents and waivers should be in writing.
Creating an Amendment to Contract
The goal when creating a contract amendment is to be as specific and concise as possible. The document can appear informal -- for example, like a letter agreement -- or it can resemble the original contract in font and layout. Generally, amendments come in one of three different styles which are discussed below, all with corresponding examples.
Method #1: Redlines and strikethroughs. Under this method, additions and deletions to the contract are shown visually, with additions underlined and deleted text crossed out. (Most word processing programs allow you to choose "strikethrough" as a font style choice.) A statement describing the process used to draft the amendment commonly precedes the amendment itself. An example is below.
Method #2: Clause is replaced in its entirety. In this method, when amending a contract you simply state that a whole clause has been replaced, and provide the new clause. Here's how it looks.
Method #3: Describing the amendment. Using this approach, the changes are described. This is often shorter but requires the parties to check against the existing text of the contract.
You can choose whichever method suits you or combine them if you wish. The important thing, as with all contract drafting, is that your intentions are clear to all parties as well as to third parties reading the amendment. In addition, be sure to change any cross-references, if necessary.
Modifications Before the Contract is Signed
If a contract is modified before it is signed, such changes are not "amendments." If you wish to handwrite a change into an agreement that been printed out for signature -- for example, because you noticed a typo at the last minute -- you can use a pen to do so and have both parties initial it. Although not technically an amendment, these modifications are sometimes labeled as such.
For practical tips on getting your agreement in writing, read Nolo's article 10 Tips for Making Solid Business Agreements and Contracts. If you're looking for an A to Z guide to everything you need to know about contracts, get Nolo's new book Contracts: The Essential Business Desk Reference, by attorney Rich Stim.