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What is a contract amendment?

In the contract management software world and legal industry, a common term is "contract amendment," not to be confused with a contract addendum.

With a contract amendment, think change. With an addendum, think clarify.

A contract amendment is defined as an addition to, deletion from, modification of, or other change to an existing contract. Parties enter into a wide variety of business contracts that cover a broad range of issues.

If you're asking: Can you legally amend a contract? The answer is yes. In fact, sometimes contracts need to be amended.

When to Amend a Contract

Sometimes parties agree to inclusion into their contract of a particular clause or specific term but inadvertently fail to include it in the contract and may not notice for quite some time. When they do notice, an amendment to include the provision would be appropriate. In other cases, the parties prepare and sign the contract in the exact form to which they agreed. However, after the passage of time, circumstances change. The parties may both agree that the contract needs to be amended to address the change.

How to Legally Amend a Contract 

When contemplating the amendment of a contract, the parties should first look to the original agreement. A contract often contains a provision specifying exactly what must be done to amend the contract. It is important to follow the formality outlined in such a clause. If no such guidelines exist, the following are typical procedures for amending a contract:

  • Some parties simply red-line the old contract (a feature that is available in some contract management software). This can be a bit unwieldy, and probably is not the preferred method.
  • Sometimes, a separate, new agreement is prepared, which explains the changes that are being made. If this method is used, it’s important to avoid creating any inconsistencies with the original contract.
  • Many amendments come in the form of new paragraphs which replace specific paragraphs in the contract. For example, the parties might agree that “paragraph five shall replace the original paragraph five in its entirety.” The new paragraph five is then typed out.

The greatest danger with amendments is simply keeping up with them. People sometimes forget about them or do not know where they are located. ContractSafe contract management software stores such amendments in a central cloud-based repository with the original contracts so that they are easily tracked and managed, thereby eliminating this concern.

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