If you regularly work with legal documents, including contracts, you’ve probably found yourself stuck in the addendum vs. amendment puzzle before. Each of these types of contract modifications has its own purpose, benefits, and drawbacks, so knowing which one to choose is key.
Regardless of which option is right for your needs, a digital document management software tool from CDP can help you simplify the process.
Contract Addendum vs. Amendment: Definitions
Since misusing these terms can lead to unintended consequences (and plenty of headaches), let’s start by defining each and getting to know its purpose.
What is an addendum?
An addendum is a document that adds new details, terms, or information to an existing contract. Addendums provide supplementary information, which means the items they introduce do not alter the original agreement’s terms.
Contract addendums are most often used to add attachments, clarifications, or minor details to a document. Regardless of what they contain, addendums don’t set out to fundamentally change what a contract says.
For example, a client may request an addendum to their contract to make adjustments to a project’s schedule without changing its scope, purpose, or specifics.
What is an amendment?
On the other hand, a contract amendment is a formal, significant alteration made to an already signed contract. An amendment brings major changes to an original document’s terms. It may modify, add to, delete, or replace existing clauses, which in turn impacts the agreement’s core content.
Anytime parties want to change terms, provisions, or conditions, they can introduce an amendment. However, since it’s much larger in scope and impact, an amendment can carry a higher risk of dispute and have additional legal implications.
Addendum vs. Amendment: What’s the Difference?
Contract addendums and amendments are similar, but when you zoom in on their differences, the importance of understanding how to use both becomes clear.
|
Details |
Contract Amendment |
Contract Addendum |
|
Purpose |
Add, delete, or modify key information in a signed contract |
Provide supplemental details, information, or conditions |
|
Scope |
Large; affects fundamental, core aspects of a document |
Small; focuses on adding information not found in the original contract |
|
Legal Implications |
All parties must agree to the amendment; may require resigning the contract with witnesses present |
Generally doesn’t require new signatures, though all parties must consent and agree to the addendum |
When to Use an Addendum vs. an Amendment
Since addendums are less formal and significant, they’re best saved for relatively minor and supplemental changes. These alterations shouldn’t change essential aspects of the contract, but what they introduce is up to the parties involved.
Meanwhile, amendments are best for reworking a contract’s basic terms and details, or the “meat” of the contract. If parties want to shorten or lengthen the contract’s terms, change its proposed pricing structure, or change key obligations, an amendment is probably the best choice.
It’s possible to use addendums and amendments for the same contract, too, if necessary. You can even add an amendment to an addendum!
Who can make addendums or amendments?
Anyone can propose an amendment or addendum to a contract. Regardless of who proposes the change and what type of alteration it is, though, all parties must agree to it. That sometimes means that all parties need to negotiate and reach a compromise before the changes are made official.
In some cases, a contract may already outline provisions that instruct parties on how to create amendments or addendums. If that’s true, following the contract terms is all you need to worry about.
CDP Powers Hassle-Free Contract Management
Whether you’re considering adding an addendum, amendment, or both to your written agreements, getting those changes made and implemented can be a lengthy process.
The more parties involved, the more potential there is for delays, confusion, or roadblocks. Eliminating the need for in-person contract signings and having quick access to all relevant materials can make your life a whole lot easier.
CDP’s document management and e-signature solutions introduce a simpler way to sign, monitor, and alter documents electronically. Our software tools are designed to help small- to medium-size organizations and financial institutions propel their businesses forward.
CDP’s live support, comprehensive training, and software set-ups tailored to your needs empower you to tackle contract management with confidence. No matter where you’re at in your digital transformation, we’ve got your back.
But you don't have to just take our word for it; you can see our software solutions in action for yourself. Contact us to set up a demo or to learn more about how our services can help you.
