What are the best ways to draft contract amendments?
Contract amendments are changes or modifications to the terms of an existing contract. They are often necessary to reflect new circumstances, resolve disputes, or clarify ambiguities. However, drafting contract amendments can be tricky, as they need to be clear, consistent, and legally enforceable. Here are some best practices to follow when drafting contract amendments.
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Aditi TomarFounder @ Aspire Legal | Prioritizing Client Satisfaction | Commercial Litigation and Dispute Resolution | Legal…
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Douglas MancillManaging Partner at Legal Analytics and Advocacy (Thailand) Limited
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Adv. Avadhi JoshiPartner at VNA Partners| Media, Entertainment and Technology Lawyer | Intellectual Property Specialist | Contract Expert
Before you draft a contract amendment, you need to identify the reason and the scope of the change. You should consult with the other party and agree on the objectives and the outcomes of the amendment. You should also review the original contract and check if it has any provisions or clauses that govern how amendments should be made. For example, some contracts may require written consent, notice, or approval from both parties before an amendment can take effect.
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I also review the contract with fresh eyes and make sure we are not adding monthly minimum feed, ensure we are not missing any clauses and whether something has changed in the nature of the deal that may require a shorter term or auto renew clause.
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Note that the need for a contract amendment arises only after a contract has been formally executed. When employing a contract amendment to effect a mutually agreed-upon change to an existing contract, it is crucial to ensure that the amendment adheres to the legal stipulations of the original contract. It is essential to distinguish between a contract amendment and a contract addendum. An amendment modifies the actual terms of the contract, conversely, an addendum retains all original contract terms while introducing supplementary ones.
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Buyers bind sellers by adding two clauses at contract stage viz,. 1. Price is fixed 2.Quantity can vary upto ,say 10%. When component price go up they take umbrage under clause 1 and try to club quantity of a different project citing clause 2 . Sales and project team has to be vigilant and firm to ensure that additional material is for the contracted project . Any change is better with a revised contract than a change order .
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What is crucially important is to CLEARLY understand what should be amended and WHETHER it should be amended. It does happen that some amendments are introduced on the spur of the moment and then further amended.
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As noted by the other contributors, you need to understand why you are doing this. Amendments make sense when you are changing a part of a current agreement. The change should be to a provision that can be compartmentalized in a way that makes it easier to swap out one set of provisions for another set. If the provisions can't be easily swapped out for new provisions, then replacing the whole contract (e.g., an amended and restated agreement) would make more sense.
There are two common formats for contract amendments: a separate document or a revised version of the original contract. A separate document is usually preferred when the amendment is minor, specific, or limited to a few clauses. A revised version is more suitable when the amendment is major, general, or affects many clauses. In either case, you should clearly indicate which contract you are amending, by referencing its date, title, parties, and identification number.
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In a revised version, the changes from the original version should be redlined. This helps counsel and the parties quickly identify the changes and ensure that no mistakes were made. It is also common courtesy.
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In my experience to start with an amendment should be in same tenor of the original contract. That said, it should be simple, specific and brief to the extent possible. Also before finalization, cross referencing with the old contract is a must do.
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We must examine all supplementary, amendment, addendum agreements previously executed to have clear understanding of latest terms of agreement. Having a policy that amendments shall be in an Amendment deed is a prerequisite.
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I write my own contracts. I look at revisions and Amendments as two different entirely different documents , not just formatting. A Revision is a new and separate document, that supersedes the original document or contact in this discussion. Language should include reference to the original contract, that it (original) is superseded by the new contract. A revised contract does not have to follow the original format, context can be changed as that might be the revision. An amendment is an addition to the original contract; must call out the contract, be written the same format as the contract, any and all clauses in the contract apply to the Addendum.
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In my experience, one should be careful about the format of amendments. Pay attention to the original contract as well as the provisions pertaining to it.
The content of the contract amendment should be concise, precise, and consistent with the original contract. You should use the same language, style, and terminology as the original contract, unless you are intentionally changing them. You should also avoid ambiguity, contradiction, or redundancy in the amendment. You should state what clauses are being added, deleted, or modified, and how they affect the rest of the contract. You should also include any transitional or consequential provisions that may be necessary to implement the amendment.
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When drafting contract amendments, it's crucial to conduct a thorough review of the original contract to ensure coherence. Clearly articulate the reasons for the proposed changes, providing context to facilitate understanding. Consider including a recital or introductory/ background section outlining the parties' mutual intent in amending the contract. Additionally, maintain transparency by disclosing any potential impacts on obligations, responsibilities, or timelines. If applicable, include a section addressing dispute resolution mechanisms in case of disagreements arising from the amendment. Finally, seek legal advice to ensure the drafted amendments comply with relevant laws and regulations.
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One thing I've found helpful is to thorougly review the original contract and then proceed to the amendment process. One will be surprised to figure out that some amendments are just NOT necessary.
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The new language needs to fit in with the pre-existing language, including defined terms, and it needs to flow with the prior language.
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précisez également les numéros des articles qui sont concernés par les modifications, cela rendra l'avenant également plus lisible
Before you finalize the contract amendment, you should review it carefully and check for any errors, omissions, or inconsistencies. You should also compare it with the original contract and ensure that it reflects the agreed changes and does not create any unintended consequences. You should also seek legal advice or assistance if you are unsure about any aspect of the amendment. Finally, you should sign and date the amendment, and attach it to the original contract or replace it with the revised version.
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One point: You need to connect each document in the trail of original, amendments and addendums to each other so that anyone looking at the documents can easily determine where each document fits. Separate documents need to be stored together. If a party uses a document management system, then time and care must be taken to properly use the system to track the relationship of each document to the others. If no document management system is used, then the documents still need to be stored together.
After you finalize the contract amendment, you should communicate it to the other party and any other stakeholders who may be affected by it. You should also keep a copy of the amendment and the original contract for your records and reference. You should also monitor the performance and compliance of the amended contract, and address any issues or disputes that may arise from it. You should also be prepared to make further amendments if needed, following the same best practices.
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The contract and any amendments are less likely to be enforceable if the documents are not fully signed, with fully-executed copies provided to each party.
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Check the requirements in the contract relating to changes. Keep the terminology in the amendment consistent with the contract. Make clear when the amendment takes effect(no backdating of signatures) and include any transitional provisions, so e.g. if orders have been placed but not fulfilled at the time of amendment which terms govern? What is the consideration for the amendment? It doesn't need to be money. The best contracts distinguish between the types of change that may be required. Provide different mechanisms for day to day operational changes, scope changes e.g. change control procedure, and those that really affect the legal terms of the contract.
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Il ne faut pas oublier d'informer les autres parties prenantes, comme par exemple la finance, les achats,..., et selon le cas de mettre à jour la base de données, comme un EPR
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Focus on the coherence of the contract and the relevant amendments, namely style, format, paragraphs. If possible, consult with the same legal advisor to contribute to the continuity.
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You need to figure out whether the contract amendment is retrospective or prospective. And articulate that in the amendment. Some elements might be retrospective, and others might be prospective only.
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In order that the integrity of the main contract is not compromised, clearly state that save for the alterations that have been made, the terms of the main contract shall apply mutatis mutandis to the Amendment agreement.
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The first thing we need to understand is the main purpose of the contract amendment. If it's for term extension purposes, the drafting team should check with the business team if they want any additional changes e.g. change in rate cards or reduced payment terms etc. Similarly, the legal team should access the risks in line to the new extended term which was agreed earlier as an exception/ or due to short tenured project. The amendment must have a defined purpose and the drafting team should work in coordination with the business team before making any change which may alter the master agreement.
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When drafting contract amendments, clearly identify the parties, reference the original contract, specify the amendments concisely, and ensure mutual agreement. Use clear language to avoid ambiguity, and consider legal advice to ensure compliance with applicable laws.
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