Ch-Ch-Ch-Ch-Changes: How To Amend A Contract
Congratulations! You have made the sale, the contract is finalized and the client has signed on the dotted line. It’s time to get down to business and get the work done. Until … your client wants to make a substantial change to your contract. Eeek! Now what?
Do not worry, we’ve got you covered. Keep in mind that no contract is set in stone. You can always amend your contract.
First things first: review the contract.
Most contracts will have a section that sets out how to deal with amendments. This language is often found near the end of the contract. The majority of the time, it will say that both parties have to mutually agree in writing to the amendment. There could be other language, but the key is to find the provision and understand what it says. Think of it as your guide to how to amend the contract. You must follow the guide in order to legally amend the contract. If your contract does not say anything about how to amend it, I suggest revising your contract using an amendment agreement, as outlined below.
Once you have reviewed the contract let’s look at how to actually amend the contract. There are a few different ways to do this:
1. Strike-through and correction:
This method is really only useful for a minor revision. Perhaps the address was written 216 and should have been 261 or perhaps the name of a party was misspelled. For something simple like these examples, the parties can simply grab a pen, cross out the error and write the corrected language by hand above it. Both parties need to initial or sign the change. This might not be pretty, but it gets the job done. For any changes that are not minor (i.e. deleting a paragraph, changing fundamental terms, etc.), do not use this method. It can lead to confusion, which is not what you want in your legal agreement. Your agreements need to be clear.
2. Amendment Agreement:
This is a completely separate agreement that both parties sign. It sets out the exact changes that need to be made to the original agreement. For example, if you want to delete certain words in a paragraph, you would indicate the exact words that would be deleted and the new words that would replace them (if necessary) in an amendment agreement. All of the changes need to be explicitly spelled out in the amendment agreement. When drafting an amendment agreement it is very important that there is no confusion as to what the new language should say. If there is the possibility of confusion, I suggest creating an entirely new agreement (as outlined in the next method below). The amendment agreement needs to refer to the original agreement, be signed by both parties and ideally be stored with the original agreement.
3. Revise and re-sign the original agreement:
Be cautious when using this method. By revising the original agreement, you are opening the door to re-negotiating the entire agreement itself, not just the particular changes that originally needed to be made. It could lead to changes in pricing, deliverables, rights and obligations that you never intended in the first place.
What this method entails is essentially scrapping your original agreement and drafting an entirely new one. The benefit to this method is that it makes it clear that the old agreement is terminated and the new one governs the relationship. If you use this method, make sure to refer to the original agreement in the new agreement and state explicitly that this new agreement replaces and supersedes the original agreement.
