Contract Amendment

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Contract Amendment

A contract amendment is an addition to, deletion from, modification of, or other change to an existing contract. As we know, parties enter into a wide variety of business contracts, covering a broad range of issues. These contracts sometimes need to be amended. For example, parties sometimes agree to inclusion into their contract of a particular clause or specific term, but inadvertently fail to include it in the contract. They might not notice for quite some time. When they do, 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.

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. 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 “this paragraph 5 shall replace the original paragraph 5 in its entirety.” The new paragraph 5 is then typed out.

The greatest danger with amendments, however, 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 repository with the original contracts so that they are easily tracked and managed, thereby eliminating this concern.

 

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What Are the Most Frequently Negotiated Terms in Contracts?

The Most Important Features to Look for in Contract Management Software