Table of Contents
In Short
- Amending a business contract requires mutual agreement from all parties involved.
- Proper documentation of amendments ensures clarity and legal enforceability.
- Regularly reviewing contracts helps ensure they remain relevant to business needs and external changes.
Tips for Businesses
When amending a contract, ensure all changes are clearly documented and agreed upon by all parties. Maintain a clear record of the original contract and any amendments for reference. Consider seeking legal advice to ensure the amendment process is correctly handled and legally sound, protecting your business interests.
As the commercial landscape is constantly evolving, business owners must continually update their business contracts. For that reason, it is essential that you understand how to amend commercial contracts to ensure they remain relevant for your commercial situation. This article will discuss how you can change or amend a business contract.
What is a Contract Amendment?
Businesses use contracts on a daily basis. In signing those contracts, they will agree to be bound by terms and conditions enforceable under English and Welsh law. Failing to fulfil the obligations under those terms and conditions can result in a breach of contract. If the parties wish to change their obligations or vary the terms of the agreement, they can discuss amending the contract. A contract amendment can change almost any clause within a contract. However, amendments can only be made if all parties to the contract agree to it.
To make an amendment, it is advisable to employ a lawyer to help negotiate the proposed changes to the contract and draft a deed of variation that implements and makes those changes to the contract.
What is an Amendment Deed?
The process of making amendments can be either brief or laborious, depending on several factors. These include:
- whether the original contract already contains clauses to set out how it can be amended;
- whether that contract relates to or has any impact on any other contracts;
- whether you are making extensive changes to the contract; and
- how well you negotiate those amendments with other parties to the contract.
To make amendments to a contract, you will likely need to use an amendment deed (also known as a deed of variation). The deed should outline the changes you intend to make to the contract and how those changes take effect within the contract. The reason that this will likely need to be a ‘deed’ rather than a simple ‘agreement’ is to ensure the variation is enforceable, even if one party is not paying the other party in exchange for agreeing to the changes.
The amendment deed will list the specific locations where each amendment has been made in a particular document. It will also usually include a copy of the original agreement and the amended contract. Indeed, it is also a good idea to include a comparison of the two documents, which, for efficiency, will highlight the changes made in the new document, depending on the extent of the changes.
Continue reading this article below the formWhat is the Difference Between a Contract Amendment and a Contract Addendum?
Contract amendments and contract addendums are two other methods of modifying existing agreements, each serving a distinct purpose. You may have also heard of the process of adding an addendum to a document. A contract addendum is another way to modify or supplement the terms of a contract. An amendment alters the terms and conditions included in a contract.
On the other hand, an addendum adds or clarifies clauses included in a contractual agreement. Furthermore, an addendum is usually appended or attached to the pre-existing agreement. They can be used, for example, to add a payment for additional services or to extend a contract’s deadline. Both methods become integral parts of the contract once properly executed, with the choice between them often depending on the nature and extent of the required changes to the original contract, as well as whether the original contract allows for amendments to be made by way of addendum.
Consent and Contract Amendments
It is essential to note that when amending a contract with an addendum or a deed of amendment, you must obtain the consent of every party to that agreement and any related agreements that may be affected.
Additionally, where the amendment is executed as a deed, each party who entered into the original agreement must sign the amendment deed in the presence of a witness or have it signed by two directors (if the party is a company). This is the case even if the original document being amended was not signed as a deed. Finally, you must ensure that each party to the contract has sufficient time to review and negotiate the terms of the amendment to their satisfaction.
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Key Takeaways
Business owners can amend contracts using an amendment deed or with an addendum, depending on the circumstances. An addendum will enable you to clarify or amend specific provisions of a pre-existing contract. Furthermore, parties usually include addendums in the form of a sheet that is signed and attached to the original document. On the other hand, amendments are a more common feature of modern business practice. Businesses use amendments to change, add or remove terms included in a contract. Contract amendments often require an amendment deed that outlines the changes being made.
It is essential to note that each contracting party must provide their consent for the changes to be legally valid and enforceable, unless the original agreement permits one party to modify the agreement without the other party’s consent. For that reason, each party must sign the amended document. It is also advisable to get a lawyer’s advice when negotiating and drafting amendments to a contract document.
If you need help drafting an amendment deed, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Yes, you can modify a contract after you have signed it. However, to change a contract, you need to have the consent of each entity that is a party to that agreement.
Amendments to existing contracts can be made through an amendment and restatement deed or via an addendum.
While it is technically possible to verbally amend a written contract in some cases, it is generally not recommended. Verbal amendments can be challenging to prove and may lead to disputes. Best practice is to make all amendments in writing, clearly stating the changes and having all parties sign the amendment. This ensures clarity and provides a clear record of the agreed changes and when they were made.
There is no specific legal time limit for amending a contract in the UK. However, amendments should be made while the contract is still active and before any breach occurs. Additionally, if a significant amount of time has passed since the original agreement, it may be more appropriate to create a new contract rather than amend the existing one.
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