Amending an Existing Contract

If a contract already exists and you and the other party want to modify some element of it—whether it's an addition, 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. Alternatively, you can create an "amendment and restatement," which is an agreement that reproduces the prior contract with the agreed-upon changes. Read on to learn more about amendments to contracts and how to use them.

To see what a contract amendment looks like, check out our sample amendment to contract.

When to Amend a Contract

Whenever you and the other parties want to deviate from the terms of a signed contract, it's important to amend the contract instead of relying on the other party's verbal or written approval. If you fail to properly amend the contract and act as if you did, you might face penalties for breaking (or "breaching") the agreement.

Putting Your Amendment in Writing

While putting your amendment in writing is always a good idea, oftentimes, a written amendment is required—either by the contract terms or by law. Your contract will likely have an entire agreement clause that specifies that any amendment to the contract must be in writing. Moreover, your state's laws might require that your particular kind of contract be in writing to be enforceable.

In some cases, one party will allow the other to technically violate the agreement (in a sense, modifying the contract's terms) without consequence. This situation is a little tricky and can cause issues without a special provision to protect the validity of the rest of the contract.

Look at your state's laws and your contract's terms to look for a written requirement.

However, you shouldn't 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. 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 be in writing—for example, amendments for transfers of real or intangible property and certain financial contracts must be in writing (as explained later).

Uniform Commercial Code (UCC) Contracts

The Uniform Commercial Code (UCC) is a set of model rules that govern business transactions. Every state has adopted some version of the UCC into its laws.

The UCC requires that some kinds of contracts be in writing. A law requiring written contracts is called a "statute of frauds." Under these laws, if the contract isn't in writing, the agreement isn't valid. In these cases, you'll also need to put your amendment in writing.

You must put the following kinds of contract (and any amendments) in writing:

• certain contracts for the sale of goods under UCC Article 2 (specifically, contracts for more than $500 in goods)
• certain lease contracts for goods under UCC Article 2A (specifically, contracts for leases more than $1,000), and
• agreements that create a security interest in personal property where the property isn't in the possession of the secured party (the creditor).

Read our article on when a written contract is required under the UCC for more details.

Amendments vs. 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 (NDA) might give the other party permission to disclose certain facts to certain people, even though that disclosure might technically violate the language of the contract.

These deviations—in which a party waives a provision or permits something that's otherwise prohibited by the contract—are sometimes considered amendments, although they're 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.

Your contract should include a waiver clause to prepare for potential consents and waivers. This clause should say that any consent or waiver by one party or a party's failure to exercise any right in the agreement should not waive any other rights under the contract. This clause means that even if you waive one of your rights in the agreement on one occasion, it doesn't waive your rights elsewhere.

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.

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.

Method #1: Redlines and Strikethroughs

Under this method, you show additions and deletions to the contract visually, by underlining additions and crossing out deleted text. (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: Replace a Clause 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, you describe the changes. This is often shorter but requires the parties to check against the existing text of the contract.

Contract Addendums vs. Amendments

Instead of amending your contract, you might use an addendum to add terms to the agreement. Unlike an amendment, an addendum doesn't change the terms of the original agreement. Instead, an addendum supplements the contract by adding terms or clarifying issues that weren't in the contract.

For example, if the contract doesn't specify the prices of products or dates for delivery, you might draft an addendum to provide these details.

Additional Information on Contract Amendments

For practical tips on getting your agreement in writing, read our article on making solid business agreements and contracts. If you're looking for an A to Z guide to everything you need to know about contracts, check out our book Contracts: The Essential Business Desk Reference, by Richard Stim (Nolo).

If you have a particularly complicated contract or have specific legal questions, talk to a local business attorney. They can review a contract for you, as well as negotiate and make changes on your behalf. Alternatively, a lawyer can draft your contract for you, ensuring the contract optimizes your best interests.