Try, Try Again: How To Legally Amend a Business Contract
Hindsight may be 20/20, but when you sign a contract, you can’t possibly predict all of the developments that will affect your agreement or your relationship in the future. That's what amendments are for. And more often than not, amendments and addenda to business contracts benefit both parties.
A written contract can be amended in a matter of minutes. If the original signatories are present, then the document can be altered and initialed without a lawyer or legal counsel. So what’s all the fuss about? Why not just jot down your changes, sign the document, and carry on?
By following a few simple guidelines, you can protect yourself from disagreements and litigation…
In business, a written contract trumps a promise, a vow, a handshake, or even an agreement scribbled on a sheet of loose-leaf paper. Contracts are the law of the land, and any time you sign a legally-binding agreement, you need to be certain that the document is iron-clad.
The same goes for any subsequent amendments to the contract. If you think that you have legally revised an operating agreement, a mortgage, or employment terms, then you want to be absolutely sure that your revisions will hold water in court of law.
Luckily, amendments are fairly straightforward to write. Many contracts specify the terms of their own emendation, and by following the simple guidelines listed below, you can protect yourself from disagreements and litigation.
5 Steps to an Amended Contract
- Review the contract and see what it says about amendments. Do what it says.
- Discuss your proposed amendment with the other party or parties involved. Do you agree on what needs to be amended? You better!
- Write, “Agreement to Amend Contract” at the top of the pertinent page. Enter the names and titles of parties involved. Clearly state in a sentence or two that both parties are agreeing to amend this contract on such-and-such date and such-and-such time. Then clearly describe the changes in writing. Make sure to note the name or number of the section that is being revised.
- Below the revision, write, “All terms and conditions of the contract not specifically amended herein shall remain in full force and effect.”
- Have all parties sign and date the changes.
The Difference Between an Amendment and an Addendum
The terms “addendums” and “amendments” are commonly used in contract law, and the similarity of the two terms can confuse business owners. Basically, “amendment” means any alteration or revision of a an existing document.
An addendum, on the other hand, does not change the contract, it adds to it. An addendum is usually added to an exiting contract only when something of crucial importance has been accidentally omitted from the original document.
As always, when in doubt, ask a lawyer for assistance. When it comes to contracts, it’s always better to err on the side of caution.