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Contract Modification Laws
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What Is a Contract Modification?
In general, the law defines the word “ contract ” as a legally binding agreement made between two or more parties that outlines the rights and duties governing their arrangement. Contracts can be created through either an oral or written agreement. Regardless of the form that a contract takes (e.g., oral versus written), a contract can usually be modified at a future date.
A contract modification refers to a situation where the contracting parties agree to change the terms of their original agreement. For example, when a person receives a job offer, the hiring company may require them to sign an employment contract. If the person stays at the company long enough to get a promotion, then they may sign a modified employment contract that includes their new job title and any salary increases.
Depending on the needs of the parties, a contract may be modified in whole or in part. Modifications can also be made after a contract is executed or even before a contract is signed. Whether a partial or entire modification takes place before or after a contract is signed, all parties must agree to any changes or else the modification will not be considered valid.
If one or more of the parties do not agree to the changes being made to a contract, then the contract will most likely be found to be invalid and unenforceable. According to standard contract laws, only modifications that are valid will be legally enforceable and binding on the parties.
Thus, if you are a party to a contract and need to modify your agreement, you should speak to a local contract attorney to ensure your changes will be valid and binding on all parties.
Why Might Contract Modification Be Necessary?
When can a contract be modified, when is contract modification not allowed, what happens when contract is modified without consent, do i need a lawyer for modifying a contract.
There are numerous reasons as to why contracting parties would want to modify a contract. Some common reasons that parties may decide to modify a contract include:
- To shorten or extend the duration of the contract;
- To alter the quantity or price of items covered under the contract;
- To add or subtract the types of goods in the contract;
- To change specific terms, such as the method of payment, delivery, or receipt of a service or product; and
- Various other scenarios that may give rise to modify a contract (e.g., a product in the contract is discontinued).
In addition, an alteration of contract may also need to happen for reasons outside of the parties’ control. For instance, it may be necessary to modify the terms of a contract if a newly passed regulation would make those terms or the contract itself illegal. In some cases, a judge may order a contract to be modified if it helps to resolve a dispute over the contract or some of its terms.
Accordingly, not every contract modification is based on the desires of the parties. Some changes may be legally required. Hence, why there are so many reasons why the alteration of a contract might be necessary.
In general, a contract can typically be modified at any point during the arrangement, so long as all parties to the contract consent to the changes being made. If the changes to a contract are minor, the parties may simply handwrite them on the original document and sign or initial their names next to the new amendment.
If a contract requires major changes, however, the contract may need to be renegotiated or possibly replaced before the modified version is signed. In addition, if the contract contains any provisions informing the parties on what to do in the event of a modification, they must follow these terms to the letter.
Aside from technical aspects and the requirement that all parties provide consent for a modification, contract changes must also adhere to the necessary legal procedures. The majority of contract laws and their requirements can be found in state statutes.
There are also three laws in particular that parties modifying a contract should review before making any changes. These include the Uniform Commercial Code (“UCC”), the Statute of Frauds (“SOF”) , and common law contract principles. Most of these laws have been adopted by states who have then gone on to create their own interpretations. Whether these laws apply will depend on a specific situation.
For example, a contract that involves the sale of goods and a merchant will be governed by the UCC . Parties attempting to modify a contract under the rules of the UCC only need to show that they are doing so in good faith.
In contrast, contracts between non-merchants or for services are usually governed by common law contract principles. Thus, under common law rules, parties who wish to modify a contract will need to provide new consideration (i.e., something of value).
Lastly, if a contract or a modification is controlled by the SOF, then any changes must be made in compliance with those rules as well. For instance, if a contract was originally created orally, but the modification would increase the value of the contract by $500 or more, then the parties must write down the new changes. Otherwise, those changes will not be considered legally valid or enforceable.
There are some scenarios in which contract modification will not be allowed. For example, if a contract contains language that prohibits future modifications of the contract, then neither party can consent to any changes. Instead, the parties will either need to form a new agreement, cancel that provision of the contract, or add an amendment that specifies special circumstances for modifications.
Also, as previously mentioned, contract modification is not allowed if it is illegal, would invalidate the contract, or when one or more of the parties does not consent to the changes. When all parties fail to give permission to modify a contract, then contract modification is not allowed and any subsequent modifications will be invalidated.
As discussed above, changing a contract without notice or modifying a contract without the consent of the other parties will render those changes null and void. Depending on how significant the modifications were, it may also have the effect of invalidating the contract in its entirety.
Thus, if a party fails to give notice or get permission from the other parties and proceeds to make material changes to the contract, those changes will most likely be unenforceable.
In some cases, changing a contract without notice can result in a breach of contract. The non-breaching party will then be able to sue the breaching party for damages under the terms of the original contract. Therefore, it is very important that all parties provide consent to any changes being made to a contract or else there could be serious legal consequences.
Contract modification can be a confusing process. There are many detailed procedures that must be followed to ensure that a modification is legally valid. Also, laws concerning contracts tend to vary widely by state. Thus, if you have any questions or need assistance with modifying a contract, it may be in your best interest to contact a local contract lawyer for further guidance.
An experienced contract lawyer can make sure that you are properly adhering to the applicable modification guidelines, can help you draft and review any necessary changes being made to your contract, and can negotiate with opposing counsel for new terms that would be in your favor. Additionally, if you need to draft a new contract because the changes would be substantial, your lawyer will be able to assist you with this process as well.
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Jaclyn started at LegalMatch in October 2019. Her role entails writing legal articles for the law library division, located on the LegalMatch website. Prior to joining LegalMatch, Jaclyn was a paralegal and freelance writer. After several years of working for both criminal defense and entertainment law firms, she enrolled in law school. While in law school, her law journal note was selected for first-round publishing, and can be found on various legal research databases. Jaclyn holds a J.D. from Benjamin N. Cardozo School of Law, specializing in both intellectual property law and data law; and a B.A. from Fordham University, majoring ... Read More
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Modify an existing contract with a contract amendment
A contract amendment allows you to change, delete, or add to an already existing contract. Learn how to amend a contract—and what to avoid when doing so.
updated November 24, 2023 · 3min read
Understanding contract amendments
When to amend a contract, how to create a contract amendment, best practices for contract amendments, contract amendment vs. contract addendum.
When your business enters into a contract with another business or person, both parties are bound by the terms of the contract and are legally required to follow them. Situations can change though, and circumstances might require an update to your contract. To do so, you need to create a contract amendment.
A contract amendment allows the parties to make a mutually agreed-upon change to an existing contract. An amendment can add to an existing contract, delete from it, or change parts of it. The original contract remains in place, only with some terms altered by way of the amendment.
Keep in mind that when you're negotiating a contract, changes made during that process are not amendments. Since there is no existing contract in place, there's nothing to amend yet. You're simply negotiating the original terms.
You should amend a contract any time you or the other party wants to make changes to the terms of the agreement. You might discuss the change, have one party write it up, and then have both sign it. For example, your company, Hats For Less, LLC, buys ribbons from Ribbon Centric, Inc., who sends you notice that they have to raise their prices on a certain type of ribbon. After a phone call in which you both agree to a new price, Ribbon Centric sends you the amended contract, which you both sign. Another possibility is that Ribbon Centric just sends you the amendment with a letter explaining their new rates and you decide whether or not you want to agree to the new terms.
Contract amendments are also useful in cases where you and the other party have ended up handling matters differently than the contract requires. Let's say Hats for Less sells fascinators to a store called Wedding Hats and the contract guarantees you'll send shipments within 14 days. For the past year, there have been some delays because you can't always get the feathers you need to make the fascinators as quickly as you'd like. Wedding Hats has been understanding about the delays and has accepted that it takes you 30 days to ship. However, since you realize that you're contractually obligated to ship within 14 days and can no longer do so, it's a good idea to update the contract to reflect that change in practice.
There are several ways to amend a contract:
- You can use a contract amendment letter to list the changes to the original document and have both parties sign.
- You can create a contract amendment created from a template or from a legal services provider.
- You can add amendment pages—digital or print—to the end of the original signed contract.
Follow these tips when creating a contract amendment:
- Always put a contract amendment in writing and make sure both parties sign and date it.
- Reference the title of the contract, if applicable; its original parties; and original signing date, so that it is clear what document you are amending.
- Attach the amendment to the original contract.
- Don't make multiple amendments, particularly if you're getting into amending previous amendments. In such situations, write a new contract so all terms are clear.
- Always restate the entire section or paragraph of the contract with the changes, instead of trying to describe how you're changing it. Doing so makes it clear what the governing language is.
It's important to understand the difference between a contract amendment and a contract addendum. An amendment changes the actual terms of the contract, such as the price of ribbons you buy from Ribbon Centric.
An addendum, on the other hand, keeps all the original contract terms in place and adds additional ones. For example, in your contract with Wedding Hats, you could add an addendum defining the terms of a new accessory you will be selling to them. All the information about the fascinator sales stays the same, but you add the terms for the new product.
An amendment is a neat and tidy legal way to make changes to an existing contract. With the new terms in writing, everyone can be clear on what they've agreed to so there's no room for misunderstanding.
by Brette Sember, J.D.
Brette Sember, J.D., practiced law in New York, including divorce, mediation, family law, adoption, probate and estat...
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How to amend a contract
One of the primary purposes of contract is that it keeps a record of the rights, responsibilities and promises made by each party. But what if we need to change the promises we've made? Can you amend a contract?
In this article we'll look at when you might need to make a change to a contract, and how to do that – both before and after it’s signed.
What's a contract amendment?
A contract amendment is exactly what it sounds like – a change to an existing contract that both (or all) sides agree to.
Amendments can be changes to anything in the original contract’s terms, clauses, sections, or definitions.
What is the purpose of a contract amendment?
The purpose of a contract amendment is to allow parties to make any mutually agreed changes to an existing contract, whilst also ensuring that the unaffected terms in the original contract remain effective.
There are lots of reasons why two or more parties might want to amend a contract in this way. It might be because you forgot to include something in the original version. Or it might be because you or someone else’s situation has changed since you signed it. Perhaps you changed your mind about signing the contract.
For example, during the COVID-19 pandemic, people have had to amend contracts to cover things like supply shortages, empty offices, or new government guidelines changing the way they do business.
Common types of contract amendments
But what does a contract amendment look like, and how might parties decide to change their contract? Some common examples of when you might choose to amend a contract include:
- To extend or shorten its length (the “term”)
- To change prices or fees for a product or service
- To change parties’ liabilities
- To extend or shorten time periods e.g. delivery or shipping times
Common questions about contract amendments
Before we dive into when and how contract amendments can be made, it's important to answer some of the questions we often hear about contract amendments, particularly about what a contract amendment is, and is not.
What is the difference between an addendum and an amendment to a contract?
While an amendment changes the actual terms of the contract, an addendum keeps all the original contract terms in place and adds new ones. Check out our post on contract addendums to find out more.
What is a contract variation?
You might hear people talk about a “ contract variation ” (especially in employment contracts) rather than a contract amendment. They’re the same thing – but to avoid any confusion it’s probably best to stick to “amendment” as a term. To vary a contract, just follow the process we go on to discuss below.
What is a contract appendix?
Appendices usually appear at the end of a contract. Unlike an addendum they don’t change or affect the contract’s terms in any way – they just add extra information about it that you need to know. That could be a document explaining what certain words in the contract mean, or something specific like benefits or share options you’ll get when you sign an employment contract with a particular company.
When can you amend a contract?
Can you change a contract before it is signed.
Yes, you can make changes to a contract before it has been signed. In fact, it's pretty easy and isn’t technically an amendment at all – it’s just part of negotiating the terms, or redlining .
Can you change a contract after it is signed?
Unfortunately, it can be more difficult to amend a contract once signed, but it is still possible. This is because once a contract is signed, it’s legally binding. Therefore, everyone involved in the contract must agree to any amendments you wish to make. And you’ll need to check the changes you’re making are clear and specific so everybody understands them, just like ordinary contract terms.
A lot of business contracts already include a clause stating how to make amendments – it’ll probably say something like “This Agreement may only be amended, supplemented, or modified by the mutual written agreement of all the Parties.” They might also describe how you can create supplemental agreements to amend terms in the future.
Even if it doesn’t say you should make amendments in writing you should do this anyway – it’ll help avoid problems later on.
Can a contract be amended by one party?
No. It is not possible for one party to unilaterally change the terms of a contract, since contract law requires that both (or all) parties agree to the terms provided and signed. It doesn't matter if it's a unilateral or bilateral contract .
If you have an amendment you would like made to a contract, you need to propose this to the other party and seek their approval first.
Before doing this, we recommend ensuring that your amendments are fair, justified, and realistic to increase your chances of receiving their support.
The process by which contracts are amended depends on the stage in the contract lifecycle at which you're looking to make the change. It also depends whether you're looking to make a contract amendment via a manual process in Word and email, or by using a contract automation platform .
The contract amendment process in Word
To make a simple, small contract amendment, you could highlight the term you wish to delete or amend and add a comment to the document, before sending it back to the other parties to review and agree to.
However, if you want to make multiple, substantial amendments to a contract, then you may find it more helpful to create a new Word document that lists all the changes to the contract. It’ll need to:
- Show the date, the title and date of the original contract (e.g. “2 March 2021, Amendments to Service Contract dated 18 January 2021”), and the party names and roles
- Describe which sections you’re modifying or deleting and how – reference the paragraph, section, or subsection. You can use strikethrough and italics for deletions or additions
- List any definitions you’re changing
- Describe any clauses you’re adding
You should also include some text making it clear that the amendments only apply to the sections referred to in the new document, and that everything else is still the same.
Finally, you’ll need to make sure everyone who signed the original contract signs and dates this amendment document and gets a copy of it. In Word, this means sending the document via email, to be amended through tracked changes, with versions being created and exchanged until you reach agreement .
The document will then be converted to PDF for signature, after which the new terms agreed will come into effect.
As many lawyers know all too well, this is a slow and extremely manual process, and one that requires switching between different tools to make even the simplest of amendments.
Fortunately, contract automation tools like Juro make amending a contract far easier, reducing the low-value admin work and removing bottlenecks in your contract workflow. Here's how:
How to amend contracts in Juro
Amendment process in juro: pre-signature.
If you want to make changes to a contract before it has been signed by either of the parties, it's really easy to do this in-browser with Juro . For example, you can:
- Make comments in the sidebar, for example if you need to let people know why you’ve edited something
- Tag people – helpful for negotiating, and to make sure someone specific realizes they’re affected by a change
- Use the timeline to compare different versions when amendments are made
And when you make an edit the other side will get an email telling them what you’ve changed, so everyone will know what’s going on.
After this, once any party has already signed the contract, that party's signature must first be revoked before any additional edits can be made.
If you are at this stage in the contract workflow, then you're in luck.
Signatories can revoke their signatures by going to the Parties tab (top grey icon on the right hand side of the contract) and pressing the three dots next to 'Signatories', followed by 'Unsign & edit'.
Also, If a contract has only been approved, and not yet signed by all parties, you can make changes and this will re-send the contract for approval.
Amendment process in Juro: post-signature
But what if a document has been signed by all parties? Well, unfortunately, it will not be possible to Unsign & edit this contract, since contracts signed electronically through Juro are legally binding - as they should be.
Luckily, if you use Juro as your contract automation platform, then a much faster way to suggest contract amendments, even post-signature. All you need to do is simply duplicate the original document from your dashboard and create a new contract with the amendments you’d like to see.
You can use Juro’s editor features to highlight or tag these sections, before sharing them with counterparties. This is far more efficient than re-drafting a contract manually on Word with your desired changes, and then saving and emailing them back and forth where you risk losing version control. When the amended contract has been agreed, just send it for signing as you would normally. Ta-da.
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Contract amendment examples
If you do decide to make a separate document to your contract to mark out any amendments (aka a change order ), then here are some good ways of doing so. Note that this isn't legal advice and you should make sure contracts are reviewed by qualified colleagues 😎
1. Changing a couple of words
“The parties agree to amend the Agreement dated 2 March 2020 with the following deletions (indicated by strikethroughs) and additions (indicated by italics):
2(b) Making a claim. The buyer must contact the seller by phone within two working days of the complaint .”
2. Replacing an entire clause
“Section 2(b) of the Agreement dated 18 January 2021 is replaced in its entirety with the following: [XX]”
3. Describing an amendment
“This amendment removes subsection (c) of section 23 of the Agreement which reads ‘[xx]’ and replaces it with ‘[xx]’.”
4. Making it clear that everything else in the contract remains the same
“All other terms and conditions not changed by this or previous amendments are still in force.”
- Ken Adams – a leading authority on the building blocks of contract language – has lots of useful information and resources on his website .
- World Commerce & Contracting (previously known as the IACCM) is a not-for-profit organization that helps members prepare, understand, and manage contracts and commercial relationships.
- LexisNexis also has lots of contract resources available.
Agree contracts faster with Juro
If getting contracts agreed quickly and at scale is a pain point for your business, Juro is an all-in-one contract automation platform that helps visionary legal counsel and the teams they enable to agree and manage contracts in one unified workspace. Hit the button below to find out more.
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What is a Change of Contract: Tips on How to Make and Control Contract Modifications
Contract amendments are common as circumstances often change after drafting the initial terms. However, this process is often tiresome for both parties since they must rewrite and renegotiate the new terms. Implementing contract change management software makes this process far more efficient with features such as notifications of edits, change tracking, version control, and smart templates.
What is a change of contract?
A change of an agreement, or contract modification, occurs when one or both parties want or need to amend a legally binding agreement. Some agreements are modified during their creation or negotiation when a change of circumstances affects the stakeholders’ goals. Contract amendments can be made verbally or in writing and can be done either before or after signing. Furthermore, the parties can edit the entire document or just specific clauses.
The most common reasons for contract changes
There are many reasons why one or both parties may wish to adjust a contract. The most common reasons for amending contracts are to:
- Shorten or extend the duration of an agreement
- Adjust the price or quantity of goods/services covered in the contract
- Amend certain terms in the agreement (payment due date, delivery, receipt of an item or service, etc.)
- Add or omit specific terms for factors outside of the parties’ control
- Resolve a dispute over the agreement
- Remain compliant with the rules and regulations that govern the contract .
When and how can a contract be changed?
Contract modifications can occur at any stage in the contract’s lifecycle, as long as all parties agree. If the changes are relatively minor, they can be written on the original document and initialed by all parties. But, if you need to make more significant adjustments that potentially change the agreement’s integrity, you should draft a new contract.
Can you change a contract before signing?
You can even make contract modifications before you finalize the agreement. In fact, it’s much easier to change the terms before signing since you can usually integrate them during the redlining process.
What rules govern the changes in a written contract?
- All involved parties must agree upon any modifications.
- If all parties are in agreement, the modifications are enforceable by law.
- If the initial agreement has contract change control terms, both parties must follow them for the modifications to be binding.
- Contract changes must comply with the Uniform Commercial Code (UCC), the Statute of Frauds (SOF), the common law contract principles, and state laws.
How to change a contract using contract management tools
The contract change management process is often tedious and time-consuming since you usually have to go through another negotiation process and must obtain the consent of all parties. But, you can optimize this process by implementing a contract management platform.
Here are some of the ways that you can utilize contract management software to boost your amendment process:
Use contract change reports to review performance and identify changes that need to be made
The first thing you should do when adjusting the terms of the agreement is to review the performance of the contract. You can do this by utilizing the data analysis features of the contract management platform. If the agreement isn’t maximizing its performance, identify why and determine which terms need to be changed.
Find key terms and clauses in the template library
You can streamline your contract change management process by using templates from the software’s library. Simply search for the type of agreement and section you wish to change, then choose a template that fits your specific scenario.
Track changes by utilizing contract change control features
It’s crucial to track changes to ensure that all parties consent. Contract management tools such as real-time modification tracking, contract change notifications, smart redlining, and version control make the process more efficient. When you use CMS to upgrade your contract change control process, all edits are accounted for, mitigating the risk of accidentally signing off on a change that you did not agree to.
When can contract changes not be made?
While there are many cases where you can make changes to a contract, there are also many cases where it’s not legally permissible. A common example of this is when an agreement contains explicit language that the terms cannot be modified. In this case, neither party can consent to any legally binding adjustments. Contract amendments cannot be made if they also make the agreement illegal, invalidate the contract, and if all parties do not consent.
The advantages of implementing contract change management software
Contract management software is the easiest way to improve your contract change process. Its features such as advanced change and version tracking, smart templates, and advanced notifications help make the amendment process much smoother than traditional methods.
The benefits of contract change management software include:
- Notifications of contract changes
- Streamlined amendment process with contract term templates
- Real-time change and performance monitoring
- Improved agreement change compliance
- Boosted contract performance after adjustments
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Understanding Unilateral Contract Modification
Understanding Unillateral Contract Modification
Unilateral contract modification occurs when one party changes the terms of the contract without input from other contracting parties. This is actually very common, especially in updates to service agreements or Terms and Conditions . These changes are legal and enforceable when your new contract conforms to best practices, including providing proper notice to the user, noticeability of the changes, and affirmative assent by the user.
When a company fails to update their agreements in a way that follows best practices, it is easy to create a situation where your new agreement is legally unenforceable. Effective contract management lets you control how you get these unilateral changes accepted. When you obtain affirmative assent from the user, you can create enforceable unilateral modifications.
This article will help you understand how to protect the enforceability of your agreements, even when you make unilateral modifications.
- What is unilateral contract modification?
Unilateral modifications are changes to an agreement made by one side rather than negotiated between the parties. These types of unilateral changes may occur due to consumer service agreement provision or changes in data privacy regulations. Agreements like Terms and Conditions are commonly modified without renegotiation with the other party.
Every time a consumer reads the news, uses their social media profile, or buys a product online, they agree to contractual terms. When these terms need to change, users are often directed to the new changes and a simple method to agree to the new rules.
This is enforceable when done the correct way. You can obtain the user’s affirmative assent through a digital contract, such as a clickwrap agreement , or follow the contract modification best practices covered further on. Failure to follow certain best practices—which comply with state and federal law—will likely mean your unilateral changes are unenforceable.
- Are unilateral contract modifications common?
Unilateral contract modifications are actually very common. They most commonly occur in transactions like those listed above. However, they may be part of many other types of contracts as well. A company may want to have control over the terms of its contract and be able to make unilateral changes in response to the market.
For example, a sales contract might specify a particular price for a product but with a clause that accounts for changes in underlying supply costs. A unilateral modification provision can protect a company from fluctuations in raw material prices by accounting for them ahead of time.
While they are common, they are still prone to costly errors and mistakes. Without strong contract management process in place such as in-depth record-keeping and contract metric analysis, these unilateral changes may violate the law or fail to provide proper notice to users.
- Are unilateral contract modifications legal?
Yes, if done according to best practices and meet certain legal requirements. The Electronic Signatures in Global and National Commerce Act (ESIGN Act) and the Uniform Electronic Transactions Act (UETA) legitimized digital contracting and electronic signatures. They play a key part in deciding whether a unilateral contract change is permissible and enforceable against a user.
Over the decades these laws have been in effect, courts have reviewed unilateral changes to determine their enforceability. In most cases, the court’s decision hinges on whether the user had “notice” of the changes and affirmatively assented to them. Cases where credit card or telecommunication industries unilaterally modified terms were often decided by the court’s analysis of whether:
- The user was given notice of the unilateral changes
- Whether the changes were highlighted or buried in the full contract
- Whether the user was given access to the changes and how easy it was to identify them
- Whether the user affirmatively assented to the changes in some way.
Courts have consistently focused on how noticeable the changes are to determine whether they will be enforced. When a user cannot easily determine what has changed, the court will likely choose not to enforce the new provision. The more you can do to make the change easily noticed, the more likely it will be enforced. Your contract can remain enforceable when your company follows unilateral modification best practices.
- Who can unilaterally modify contract terms?
The party who presents the contract is usually the party that can unilaterally modify it. Unilateral modifications are usually made by large companies working with individual consumers. These consumers are unlikely to be involved in a legal negotiation with a large company for their service. Instead, they expect that company to handle those issues fairly and legally.
This is very different from bilateral modification, where two parties negotiate the terms of an agreement. This usually occurs between two sophisticated business entities with legal teams negotiating a large contract.
- Examples of unilateral contract modification
The following examples demonstrate when a company may want to make unilateral changes to an agreement:
Customer service agreements
Customer service agreements are especially common with service providers, such as software service agreements. Many software agreements contain “change of terms” provisions that permit a seller of a service or product to unilaterally change certain elements of the contract without prior notice to the buyer. These may include terms like:
- Service price
- Interest rates
- Late payment penalties
Customer service agreement changes are typically unilateral, without input from the customers. Many are simply posted online, and its terms state that continued use of the service indicates acceptance of the changes. This type of provision often fails in court, as the user had no notice of the changes.
Terms and conditions
On nearly any website, a company may require that a user agrees to its terms and conditions before continued use of the website or a product. Changes to these terms and conditions are common and are nearly always unilateral. A customer is not involved in negotiating these changes, but they may be entitled to notice of the changes. Failure to get the user’s affirmative consent to these changes may mean it is unenforceable in a later dispute.
Service level agreements
A service level agreement (SLA) defines the terms between a customer and client. It is also commonly known as a vendor contract. These agreements define the level and quality of service provided, how it will be measured, and explain any remedies or penalties if a party falls short. SLA’s are commonly modified through unilateral changes. Changes to specific product offerings or how failures are measured may be changed without negotiation if the proper notification procedures are followed.
- Unilateral modification best practices
If your company wants to modify agreements with its users unilaterally, you can do that. You just need to follow best practices to ensure your agreement remains enforceable . These best practices reflect years of industry experience and analysis of relevant case law. Too many companies skip these important benchmarks and find out their changes are ineffective too late.
1. Let the signer know you’ve changed the terms
Proper notification to the signer is one of the most important parts of any unilateral change. The user must be told that the agreement has changed. This does not have to be complicated. Users can be notified of changes through:
- in-app notifications
- website notifications
- browsewrap agreements
2. Obvious and conspicuous notice about changes
The changes should be obvious and conspicuous. Any changes should be in bold and possibly in all caps. Companies that bury their changes within the rest of the agreement often discover that a court will not enforce those changes because it did not adequately provide notice to the consumer.
A company may also list all unilateral changes in a single place in the agreement where it is noticeable and specifically marked. The more you can make the changes obvious, the more likely it will be enforced.
3. Get affirmative assent to the new changes
You should get affirmative assent to these modifications when you change a contract. Too many companies assume their “change of provisions” clause in a contract will suffice. Case law is unclear on this, and many courts have held that, without affirmative assent from the consumer, they will not enforce changes.
Affirmative assent can be gained through easy one-click methods like a clickwrap agreement . These agreements provide an easy way to deliver the changes to the user and require them to take an affirmative step to agree to it by checking a box or clicking “I agree.” A sophisticated clickwrap can then record the acceptance details and create an audit trail to bolster the enforceability of unilateral modifications.
4. Keep accurate records
Many companies don’t fail in notification but in record-keeping. When it comes time to enforce an agreement, you have to show that the user agreed, when they agreed, and what they specifically agreed to. Sophisticated eSignature and clickwrap technologies store information automatically in a central repository . The information is automatically stored to make it easy to find and use to enforce an agreement.
- Enforce your unilateral contract modifications
Unilateral contract modification is permissible and enforceable when you follow best practices. Using obvious and conspicuous changes the user can find easily will make your contract enforceable. When your contract acceptance method shows affirmative assent to the changes, you can demonstrate that the user actively agreed to the modifications. Ironclad’s contract lifecycle management software gives you the tools needed to create enforceable and easy-to-use agreements.
Request a demo to learn more about creating enforceable unilateral contract modifications for your business. We are here to help.
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- Contract process
Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.
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How to write an addendum to a contract in 7 easy steps
Olga Asheychik Senior Web Analytics Manager at PandaDoc
Once a contract is signed and sealed, it’s then set in stone — or is it?
Things often change, and knowing how to write an addendum to a contract can be a necessary skill on many occasions.
So, we’re going to explore what an addendum to a contract is and how you can use one when needed.
What is an addendum to a contract?
An addendum to a contract is a legally binding additional document that can be added to an existing legal contract.
Once a contract has been signed, it’s usually difficult to amend that contract without adulterating it, which could render it null and void.
Instead of writing a completely new contract, it’s possible to use a contract addendum.
With a contract addendum, you can add new clauses without nullifying the contract.
As it’s legally binding too, an addendum can alter any terms of the contract and conditions contained in the original agreement.
In essence, it lets you add something new to a pre-existing contract without changing the status of the legal document.
Contract addendum vs. amendment
Many people get “contract addendum” and “contract amendment” confused.
The simple way to remember the difference between these two terms is that a contract amendment alters an existing contract, while an addendum adds to one.
An addendum is a separate document that’s added to an original contract.
Another difference is that amendment must involve all parties (or their legal representatives) concerned in the contract , while either party (or a third party) can add an addendum (though it needs to be agreed upon by the parties involved in the contract).
It’s important that you know the difference between how to amend a contract and how to write and add an addendum.
As contract amendments can make important changes to — often legally binding — documents, it’s important to get the writing of them correct.
The following are some simple guidelines to get you on the right track.
1. Consider and mirror the language of the original contract
While an addendum is its own document, its principal purpose is to update or correct an original contract.
As such, it should mirror that original document as much as possible.
Be sure to continue referring back to the contract when drafting an addendum, and particularly consider:
- The language
- The formatting and layout
- The font size and style
As far as possible, match all of the above in your addendum.
That way, no parties should be in any doubt that the addendum is as important — and relevant — as other clauses of the contract .
2. Choose an addendum title
Your addendum needs to make it as clear as possible what changes it details and to which original contract.
The first place you can ensure this is in your addendum title.
Give the addendum a title that references the original agreement’s name and date, and make it clear that it is indeed an addendum to that contract.
For instance, perhaps you’re drafting an addendum to a residential lease agreement originally signed on the 1st of January 2021. Your addendum title might be:
“Addendum to Residential Lease Agreement Between [Your Name] and [Lessor’s Name] of the 1st January 2023.”
Contract Addendum Template
Used 5826 times
Do you need a legal arrangement that modifies a pre-existing warranty between two or more parties? Just use this Contract Addendum Template.
3. Make clear the parties involved
You may have noticed that the title suggested above also referenced the parties involved in the original contract.
That’s because it’s also important to be clear about which parties any addendum involves.
Usually, that will be the same parties as were involved in the original contract.
However, there may also be a third party with an interest in the addendum. In this case, this should be clearly stated.
4. Clarify the part of the original contract the addendum refers to
Most addenda will be designed to update or correct an existing agreement.
As such, they will usually refer to a specific part of the original contract. Which part needs to be clearly defined.
You should cite the title of any clause the addendum relates to and use things like italics, bold, and strikethrough to make clear what’s being replaced or modified.
For instance, say you were writing an addendum to a car rental lease agreement where it was the details of the vehicle that needed changing.
Part of your addendum may look like this:
Original “Identification of Rental Vehicle” Element of the Agreement:
Model: Fiesta VIN: 12345678 Color: Red Year: 2020
Modifications Proposed by this Addendum:
Model: Fiesta Focus VIN: 12345678 Color: Red Year: 2020
5. Ensure compliance with the original contract and all other relevant regulations
In order to ensure your addendum is fit for purpose and binding, it must not go against the original terms or requirements of the contract itself.
It should also comply with all laws and legislation in your jurisdiction.
It’s vital to check this before asking any parties to agree to the addendum.
6. Add any additional elements necessary
As well as the details sketched out above, there are some other necessary elements that most addenda will need to include:
- The effective date from which the addendum becomes active
- Relevant force majeure details
- A signature block for all relevant dates to sign and date the addendum — either physically or with an eSignature
- Disclaimers or other similar clauses, if required.
7. Consider seeking legal advice
Finally, it’s also worth considering seeking the advice of a law firm or legal professional before you present the addendum to the relevant parties.
This will avoid any chance of the addendum falling foul of laws or regulations — even those you may not be immediately aware of.
Addendum to contract sample scenarios
It’s useful to know some of the different scenarios where an addendum to a contract is used, so we’re going to explore some sample scenarios.
1. Addendum to an employment contract
Employment agreements can be lengthy documents, and it can often be the case that some clauses and details are left out.
These omissions can be both intentional and unintentional.
An addendum to an employment contract offers an opportunity to remedy such omissions or to add new details to remedy clauses in the original contract that may have been contentious.
A good example of an addendum to a contract being needed is if the original contract’s clause regarding termination of employment only included death or employee resignation.
An addendum could be added later that also includes other grounds for termination, such as gross misconduct, breach of contract by an employee, or scenarios where the company is suffering financially and has to make compulsory redundancies.
2. Addendum to alter insurance coverage
Another type of contract that often needs addendums is a contract used for insurance coverage.
There are many scenarios in which an addendum to an insurance contract may be required; for example, state laws regarding insurance often undergo changes.
This may require an addendum to an existing insurance coverage contract.
As well as factors directly related to insurance, there’s also the aspect of data protection.
If there are changes to the regulatory framework and compliance requirements surrounding how a company handles a customer’s confidential information, an addendum may be needed to reflect such changes.
3. Addendum for real estate purchase contracts
The real estate sector is one where there’s a frequent need for addendums to original contracts.
There are multiple scenarios where the details in the first signed agreement change and need an addendum to update those details and keep the contract legally binding.
Some of those scenarios include:
Extension of the closing date
If problems arise, such as with the buyer’s financing or with the sale of their own property, both parties can agree to an extension.
An agreement may be put in place that the full payment can be withheld until certain “tasks” are carried out by the seller.
The buyer may choose to add an inspection contingency addendum so that if any inspection reveals issues with the property, they can withdraw from the sale or request that the issues are resolved.
In some cases, such as with developers, the seller may agree to grant the buyer a mortgage.
This addendum to a contract example would include all details of such financing, such as the repayment period and monthly payments.
If the seller of a property owes more money on it than the current market value, this addendum directs the seller to field offers on the property but also to seek their creditor’s consent to accept an offer.
This addendum type may be needed when there’s a mutual agreement to cancel the sales contract and will recognize that neither party holds the other at fault.
It may also cover details regarding the return of a deposit and when that action should take place.
Learn how to write an addendum to a contract with a user-friendly template
It can sound like a complicated process, but it doesn’t have to be.
And while you may want to use an attorney or more complicated addendums, in most cases, it’s an exercise you can carry out yourself as long as you’re aware of what an addendum to a contract should look like.
What can make the process even easier is using a contract addendum template from PandaDoc.
The great benefit of the PandaDoc template is that it takes care of all the tricky legalese that is needed in such documents and allows you to focus on the details you need to change or rectify.
It removes the need for legal expertise, but you may have to double-check some details, such as relevant state laws.
The PandaDoc contract addendum template can be used in any of the scenarios listed above.
In fact, it can be used in any scenario where one or both parties want to change certain details of the original contract.
As long as there’s agreement on any changes to be made, you simply fill in the necessary sections of the template.
By following the guidelines above and ensuring that all changes have been agreed upon, you’ll find that PandaDoc has helped make what could be a complicated process extremely simple without needing any in-depth knowledge of contract law.
All the knowledge you need is the definition of an addendum to a contract.
Whether adding an addendum to an employee’s employment contract or adding the new terms agreed upon with a client, PandaDoc has made it as easy as A, B, C.
Contracts 8 min
Sales 9 min
Contracts 14 min
Sample: 10-step checklist for an effective contract management process.
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Contracts play a significant role in regulating relationships between parties, often defining the terms and conditions and consequences of not upholding them. Lawyers, whether in-house or outside counsel, are critical to managing contracts and may often find themselves taking on several roles throughout the contract lifecycle. Responsibilities can include drafting an agreement, negotiating its terms, finalizing it, monitoring its performance, helping with termination, and addressing potential breaches or other issues impeding performance.
The five stages of contract management
A well-defined contract management process can help lawyers meet the expectations of clients, management, and organizational governing bodies to deliver greater value, efficiency, transparency, and cost reduction in legal services throughout the lifecycle of a contract. While the contract lifecycle of your practice or legal department may differ, most cover these five stages:
- Due diligence
How you approach these five contract management stages requires careful consideration of your operations, resources, and requirements. These factors should form the steps you’ll take to navigate each stage of your contract management process. The steps and, in turn, your process should enable a continuous approach to contract management.
The checklist below outlines the recommended steps to help you design an effective contract management process.
[Download our Contract Management Playbook for a template of the sample checklist below, plus more contract management essentials.]
Due diligence stage
Step 1: define scope and prepare the business case.
- Determine the scope of the engagement.
- Document the business case.
- Prepare the business case. Involve stakeholders, including, if possible, the end users.
- Contract outcome(s)
- Critical success factors
- Identification of any contingent or special needs
- Timeline for deliverables, including start/end dates
Step 2: Identify parties and set budgets
- Assign a sponsor as needed, especially for complex transactions.
- Identify stakeholders, including reviewers, approvers, and those responsible for deliverables.
- Set budgets and limits, including proposed payment structures.
- Seek and review all the bids and proposals.
- Track the information submitted to help determine the proposals closest to the criteria.
- Use your criteria to select the final choices.
Step 3: Complete background checks and approvals
- Conduct a thorough investigation of both the business and legal backgrounds of the relevant party or parties.
- Obtain preliminary approvals for the engagement to launch the negotiation stage.
Step 4: identify necessary contract documentation.
- Identify the contracts and related documents required to document the relationship and complete any immediate transaction.
- Collect and review examples of the necessary contracts to expedite the drafting process.
Step 5: Finalize contract requirements
- Nature, scale, and significance of the need for the organization
- Value of need
- Type of specification: input or output
- Complexity of the need, including the innovation level
- Attractiveness to the market
- Market capacity
- Time scale and phasing
- Identify the steps to be taken to comply with the requirements of any contract review, including required reviews and approvals.
- If warranted by the complexity of the proposed transaction, prepare a project plan to set the time and responsibility schedule for drafting, review, discussion, revision, and completion of all required items and activities.
- Document the post-implementation review to monitor the completion of expected outcomes.
- Launch discussions to start the negotiation of essential contract terms.
- If appropriate and useful, prepare a term sheet or letter of understanding to ensure the parties agree regarding the essential terms before spending any time or effort on contract preparation.
- If direct negotiations aren’t possible, create a list of questions to discuss with counterparts.
- Collect the responses and review them for updates to the preliminary agreement.
- Obtain the requisite approvals and signoffs to finalize the contract.
- Deliver final, executed copies of the contract and related documents to all interested parties.
Step 6: complete contract execution.
- Oversee completion of the closing of the transaction and any required performance and payments/fees obtained or completed full or in part.
- Address any internal control changes warranted; for example, policy documents or delivering training to relevant parties.
- Obtain any required acknowledgements, such as performance signoffs, for example.
Step 7: monitor contract performance.
- Establish a plan for the ongoing review of the performance of the contract terms, primarily in long-term contracts.
- Set dates identified in the contract that may require follow-up action.
- Conduct any agreed-upon or special review and audits to check performance.
- Address change requests based on performance reviews.
- Make sure to have procedures for contract amendments to facilitate changes.
- Determine if a renewal of the engagement is needed and accounted for in the original contract.
Step 8: terminate the contract.
- Upon completion of the contract deliverables, it’s time to close out the contract.
- Process all final payments and document performance standards.
- Finalize all documentation to prepare for the closing of the transaction.
Step 9: Address breaches
- Define the types of incidents that would result in the contract’s breach or termination; for example, the inability to complete deliverables by a set time, or the inability to complete the deliverables at all.
- Have procedures in place to promptly communicate any new developments to the appropriate individuals within the company.
Step 10: Keep records
- Organize contract files and related documents and retain records per required recordkeeping standards and requirements.
[Download our Contract Management Playbook for a template of the sample checklist above, plus more contract management essentials.]
Auditing your contract management process
The above checklist offers recommended steps to help you design an effective contract management framework, but the process you implement should reflect your organization’s individual needs. Plan on reviewing your contract management process periodically to keep it current and responsive to organizational changes. During your review, keep the following in mind:
- Factor the process review into your annual goals each year.
- Solicit feedback from stakeholders about how to make the process more user-friendly.
- Consider adding visuals – such as flowcharts, checklists, and graphs – to help create understanding.
- Add scenarios or techniques that help or reflect what can go wrong.
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An effective contract management process is critical for attorneys juggling multiple agreements and roles. Download the Contract Management Playbook to learn how to streamline your contract workflow and deliver greater value, efficiency, and savings.
Contract management software can help automate and simplify the contract management process. Bloomberg Law Contract Solutions solves the most pressing challenges in your contract workflow with a solution built specifically to help in-house attorneys more efficiently store, manage, draft, negotiate, and analyze contracts. Request a demo to see how Contract Solutions can solve your contract workflow challenges with AI-powered drafting, editing, and negotiating tools.
- EXPLORE Random Article
How to Change a Contract of Employment
Last Updated: March 29, 2019 References
This article was co-authored by Clinton M. Sandvick, JD, PhD . Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013. This article has been viewed 61,092 times.
An employment contract is an agreement between an employer and an employee. It explains the rights and obligations of both parties. These rights and obligations generally include pay rates, raises and bonuses, job responsibilities and duties, employer provided benefits, and termination of employment procedures and restrictions. But employees' responsibilities may change over time, and market conditions also remain in flux. Consequently, the original employment contract must be modified in order to reflect these changes. Changing an employment contract involves a negotiation between the parties to meet everyone’s goals.
Negotiating a Change
- If you are an employee, you could start by contacting your company’s human resources department or contacting your boss directly.
- If you are the employer, you should approach your employee or have human resources approach them.
- Underpayment or overpayment of the employee based on the market.
- Heightened employee responsibilities.
- Different job responsibilities than the ones that are set out in the current contract.
- The level of employee performance.
- Changes in the education or experience level of the employee.
- Try to be flexible with your goals. It’s possible that the other party may come up with options that you did not think about beforehand. Don’t dismiss their suggestions out of hand.
- Listen! While you are negotiating, listen to what the other party is saying. If you listen carefully it will be easier to figure out what the other party is willing to give you.
- Be realistic. You need to have as much information as possible when you go into the contract negotiation so that your goals are realistic. You need to be able see the negotiation from both sides. Understand what the other side's primary goals and motivations are.
- Make allies. Oftentimes, other employees will be willing to advocate on your behalf if you are doing a good job. This may be especially true if you are not re-negotiating your contract with an immediate supervisor.
- Be professional. No yelling, screaming or crying. Calmly explain why you have earned a new contract.
- Use evidence. Bring in evidence that explains why you deserve a new contract. If necessary, use charts and graphs to show how you have increased sales, productivity, etc. Don’t be afraid to make the case that you have done a good job and are an asset to your company.
- If you have a better offer from another company, use that as leverage. You will be able to make a credible argument that this is what your skills are worth on the open market. You need to explain that you would rather stay with your current employer, but that you are willing to move to a new company to be paid what you are worth. (Don’t bluff in this situation. If you have no desire to leave, don't threaten to do so.)
- Don’t box yourself into a corner. Try to avoid issuing ultimatums. If you issue an ultimatums you leave yourself exposed. Try to propose alternative solutions that give you an escape hatch.
- If you successfully renegotiate your contract be grateful and magnanimous. Thank them for your new contract and be respectful.
- The law of contracts requires that changes to a contract are supported by "consideration."  X Research source Farnsworth, Contracts: Cases & Materials, pg. 28-30. To give consideration just means to agree to do or not do something. In contracts, it is understood that some kind of exchange is being made. In a legal contract, each side is providing some kind of benefit to the other. As an example, when an employer offers to pay an employee a larger salary in return for the employee working longer hours than the original contract specified, the parties have each given consideration (employer = more money; employee = longer hours).
- Make sure that any changes are memorialized in a written addendum or a new contract. Employment contracts that specify a duration of longer than a year are required to be in writing.
- All parties to the change may write down the change in an entirely new contract or, you may add an addendum to the current contract. If any of the modifications to the contract conflict with the current terms of the contract, you cannot use an addendum. You instead must execute a new contract. However, if the changes do not contradict the current terms of the contract, you may instead want to use an addendum.
Adding an Addendum to Change a Contract
- Rereading the contract in its entirety is the first step in making an attempt to change the contract.  X Research source Farnsworth, Contracts: Cases & Materials, pg. 380-381. Specifically, you should look for any references to provisions for changing the contract. In particular, look for a modification clause that outlines how changes can be made. If no specific directions for modifying a contract are given, you will need to add an addendum or write a new contract.
- Let's say the original Employment Contract was titled “Employment Agreement”, and it was signed by the parties on May 9, 2015. Your addendum should include a statement that the document is an addendum to the parties' Employment Agreement of May 9, 2015.
- After naming a party for the first time, you should include in parentheses the name by which the remainder of the contract will refer to him or her. For example, you may include a statement such as, “this Addendum (“Addendum”) is a modification of the Employment Agreement (“Agreement”) between ABC Enterprises (“Employer”) and Jane Smith (“Employee”) which is dated May 9, 20015.”
- Use strikethrough and bold font to clarify additions and deletions. For example, “the original text of Item I of the original Employment Contract would go here and any words you wanted wish to delete would be stricken with a strikethrough while any words you want to add would be put in bold type .”
- Specify whether an item replaces a current item in the contract, changes one, or is a new item. For example, “Item I of the Employment Contract shall be modified as follows with the text in bold added to the Item and the text containing a strikethrough deleted.”
- Attach the original contract to the addendum, and reference the fact that you have done so in your Addendum. For example, “the original Employment Contract dated May 9, 2007 is attached and made a part of this document.” This ensures that all parties signing the addendum are clear about which contract the addendum changes.
Changing a Contract of Employment with No Modification Clause
- Non-compete Agreements. Courts will sometimes modify contracts that contain very restrictive non-compete agreements. For example, if an employment contract states that the employee “may not take work in the same field anywhere in the United States for a period of 20 years,” a judge may alter it. The court would probably modify that portion of the contract to instead read the employee “may not work in the same field within 5 miles of the location of the current employment for a period of 12 months.”
- Fraud. Fraud occurs when a party intentionally makes a false statement regarding a matter of fact upon which the other party relies and as a result is injured. If a party fraudulently represents something regarding employment (such as employee ability or hours required), the court could modify the contract or allow the injured party to get out of the contract.
- Duress. If the court finds that the employer or the employee was threatened into signing the contract, it can be rescinded or modified to reflect more favorable terms.
- Unless it is allowed by the existing contract, an employee may sue an employer who fired them for refusing to sign a new contract.
- On the other hand, an employee who terminates a contract because the employer will not modify the terms, the employee can be sued for breach of contract.
- If your place of employment has a legal or human resources department, consult that department regarding the usual process for changing employment contracts. Thanks Helpful 0 Not Helpful 0
- You should consult with an attorney before signing anything that may affect your legal rights and obligations. Thanks Helpful 0 Not Helpful 3
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- ↑ See generally Farnsworth, Contracts: Cases & Materials.
- ↑ Farnsworth, Contracts: Cases & Materials, pg. 28-30.
- ↑ Farnsworth, Contracts: Cases & Materials, pg. 205-210.
- ↑ Farnsworth, Contracts: Cases & Materials, pg. 380-381.
- ↑ Farnsworth, Contracts: Cases & Materials, pgs. 61-64, 328, 378, 522, 557-562.
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What Happens to a Contract When a Business Changes?
Can a Contract Survive a Name Change or Other Change?
- Contracts and Business Changes
- When a Business Changes its Name
- When a Business is Bought or Sold
- When a Business Declares Bankruptcy
What if you have a contract with another business or with a person, and there is a significant change in one of the businesses?
Some business changes are small, like a location change, and some are large, like bankruptcy or a name change or one of the parties to the contract being bought by another business.
You might work for a business as an independent contractor and you have a contract with that. Or your business might have a license agreement to sell the licensed products of another business. Or your company may be leasing commercial space from someone.
The simple answer to what happens to a contract when a business changes is, "it depends on the contract."
Contract Sections and Business Changes
Many business contracts include sections dealing with what happens if there is a change in the business. Two contract principles that might affect the need to make a change in the contract are novation and assignment.
Novation is a substitution, including the substitution of one party or obligation for another in a contract. Here's how that works: Party A and Party B are the original signers of the contract. Party A has been bought by Party C, Parties A and B must agree to the novation and sign a novation agreement stating that Party C has been substituted for Party A. Party A is excused from liability by the novation agreement, and Party A gives up any rights against Party B.
A novation agreement may be part of an original contract, or it may need to be signed at the time of the change. In the case of a name change, for example, a novation agreement might be needed in order to make a new contract with the newly named business.
Assignment is a transfer of some property or ownership to someone else, including duties and rights. For example, some independent contractor contracts state that the duties of the contractor can't be assigned or transferred to someone else. Ownership of intellectual property (copyrights, trademarks, or trade secrets) are sometimes transferred to someone else. A contract might include the right to transfer the responsibilities of one of the parties of a contract to another business entity, which might include the assignment to a successor (new) company.
Another option for changing a contract for a business change is to create aletter of agreementthat refers to the specific change and have both parties sign it.
Here's an example of an assignment agreement by which the assignor (the party who does the assigning) assigns a stock purchase agreement to an assignee (new owner). The assignee gains all the assignor's rights and interest in the property, and the assignee agrees to perform all "obligations, duties, liabilities and commitments" of the assignor under the agreement.
Contract if a Company Changes its Name
Here is an example of what might happen to a contract if a business changes its name:
"I have an employment contract with a business. I was informed this morning that the company has changed its name and legal entity. They even have a new sign on the building. Does this mean the contract is void? More to the point, does that mean I don't have to abide by the non-compete agreement?"
In these types of situations, a lot depends on the wording of the contract. Some contracts plan for the possibility of changes.
Some contracts specifically state that the parties "now known as XYZ Corporation" or "by any other name" or " by which the party may be titled." or something to that effect. Even if the possibility of a name change isn't specifically mentioned in the contract language, the business doesn't get out of contracts just by changing its name and legal type.
If you think about it, that would be a neat way to avoid debts, by just changing the name of the business. So, no, a name/entity type change doesn't mean a contract is void.
An Example of a Name Change Agreement
You can also sign a separate agreement to acknowledge the name change of a company. In this case, the change-of-name agreement includes:
- A document proving that the name has officially been changed with the state where the business is registered,
- The opinion of an attorney that the change of name was legally done,
- A list of contracts and purchase orders between the two parties,
- The agreement that all rights and obligations of both parties to these contracts are not affected by the change, and
- A statement that all contracts covered by the agreement are amended by substituting the name.
Contracts When a Business is Bought or Sold
If a business has a major change in ownership, (the sale of a business, for example), part of the terms of the sale may be the assignment of the contract to the new owner. If the business sale documents don't specify, you might have to look at the contract itself.
As part of the buy/sell process, a new contract may be substituted for a previous contract, with the agreement of both parties. This is the novation section discussed above.
Contracts When a Business Declares Bankruptcy
The bankruptcy judge in a bankruptcy process decides what happens to active ongoing contracts during the bankruptcy process. You can hire an attorney to protect your interest in the process, including making the debtor (the company in bankruptcy) specifically affirm or reject your contract.
The amounts owed to you under a contract also fall into the bankruptcy process and you become a creditor of the company in bankruptcy. In Chapter 11 (reorganization), the debtor agrees to a plan, which creates new contract rights that replace or supersede pre-bankruptcy contracts.
You should know that if you and the debtor have an ongoing contract that obligates you both to certain requirements (buying and payment, for example), you can't stop doing what the contract requires during the bankruptcy risking being in default.
Disclaimer : If you have a contract with a business and something changes, consult your attorney before you make any decisions, sign a new contract, or make statements that might compromise your status in the contract.
SEC EDGAR. " EX-4.130 24 d316138dex4130.htm Form of Novation Agreement. Dated December 30, 2011. " Accessed April 10, 2020.
Cornell Legal Information Institute. " Novation ." Accessed April 10, 2020.
Cornell Legal Information Institute. " Assignment. " Accessed Apr. 10, 2020.
Acquisition.Gov. " 42.1205 Agreement to Recognize Contractor's Change of Name. " Accessed April 10, 2020.
United States Courts. " Chapter 11 – Bankruptcy Basics ." The Discharge. Accessed April 10, 2020.
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Can you change a contract after signing? – How to amend a contract
Learn about how to legally protect your online business with The CEO Legal Loft blog. We cover advertising, intellectual property, business formations, and the important legal aspects running a business online.
Have you ever asked yourself the question, “How can I change a contract after it has been signed?”
You’re not alone. When people ask this question, they’re usually frustrated or not sure where to start. Luckily, there are steps you can take to get your contract changed. And in this blog, I’m going to tell you how to amend a contract, after it has been signed.
Amendment vs. Addendum
Before we dive in, there are different types of ways to change a contract. One way is an amendment and the other way is an addendum.
- Amendments: Amendments are useful when you need to make changes to a contract without having to create an entirely new one. Amendments can be used to change the delivery date, extend the term, modify payment terms, or make any other necessary adjustments.
- Addendum: A contract addendum is an addition or attachment to an agreement that modifies or adds obligations and/or terms to the original contract.
Is it legal to change a contract after signing?
In general, it is not legal to change a contract after signing without the agreement of both parties. Once a contract has been signed, it becomes a legally binding agreement, and any changes to its terms must be done in a formal and transparent manner. Any attempt to alter the contract unilaterally could be considered a breach of contract and may lead to legal consequences. However, there may be certain exceptions to this rule, such as when there is:
- A mutual mistake
- Fraud in the original contract
- A change is necessary to fulfill the obligations outlined in the contract
Ultimately, it is important to ensure that any changes to a contract are made through the proper channels and with the consent of both parties to avoid any potential legal issues .
First, you should review your initial contract to see what the terms are, and whether those terms allow for any changes.
The first thing to do is review your initial contract to see what the terms are and whether those terms allow for any changes. You should also check how much time has passed since you signed it. If you signed a week ago and now want to change it, that’s different from signing a year ago and asking for changes.
This section in your contract that you’ll find whether or not you can change your contract is usually under “Modifying a Contract”.
If you can’t change the terms through the contract itself, you can always propose to your partner that you amend the contract.
If you can’t change the terms through the contract itself, you can always propose to your partner that you amend the contract. It’s always better to do this formally and in writing – an oral amendment won’t be enforceable if there is a dispute later on.
If you and your client have a good relationship and it’s not a major change in the contract, there should be little to no issue on amending the contract.
Once you’ve decided that you can change the contract, you’ll need to draw up a contract amendment
Once you have agreed on the changes, you will need to draft a contract amendment that accurately reflects the agreed-upon modifications. This document should include the elements discussed below.
What should be included in an amendment?
To ensure that the amendment accurately reflects the agreed-upon changes, it should include the following elements:
- Identification of the parties involved : The amendment should identify the parties to the original contract, as well as any new parties that are being added or removed.
- Reference to the original contract : The amendment should include the date and title of the original contract to make it clear which agreement is being modified.
- Clear description of the changes : The amendment should clearly describe the changes being made to the original contract. This may include adding or removing terms, modifying existing terms, or clarifying ambiguous language.
- Agreement of all parties : The amendment should be signed and dated by all parties involved in the contract, indicating their agreement to the changes.
- Effective date : The amendment should specify the effective date of the changes, which may be different from the date the amendment is signed.
- Integration clause : The amendment should include an integration clause stating that it is the entire agreement between the parties with respect to the subject matter of the amendment, and that it supersedes all prior agreements and understandings, whether written or oral.
The new amendment will become part of your original contract.
It’s important that both parties sign and date the new version of the contract. Make sure that everyone involved has a copy of the amended agreement and keep a signed version for your records. This will help avoid any confusion or disputes in the future.
Takeaway: It’s possible to change a contract after it is signed, but both parties need to agree that this is necessary.
In short, as with most legal changes and additions to contracts, it all comes down to a matter of trust. If you have built a strong relationship and rapport with the client, they will likely be willing to negotiate on these terms. On the other hand, if there is little trust between you, adding conditions or changing language in an existing contract will likely be next to impossible. So make sure that the trust is well earned, and you have a solid working relationship with your client before making any substantial changes.
If you’re not sure how to structure your contract amendment, grab the contract amendment template .
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U.S. export controls need to 'change constantly' even if it's tough for businesses, Secretary Raimondo says
- U.S. Commerce Secretary Gina Raimondo told CNBC's Morgan Brennan in an exclusive interview that more controls on tech exports to China will be coming, despite business concerns.
- "The truth of it is though, technology changes, China changes and we have to keep up with it," Raimondo said.
BEIJING — More controls on tech exports to China will be coming as needed, despite business concerns, U.S. Commerce Secretary Gina Raimondo told CNBC in an exclusive interview.
"We have to change constantly," Raimondo told CNBC's Morgan Brennan over the weekend on the sidelines of the Reagan National Defense Forum.
"I know that's hard for industry. They want a clear line in the sand," the commerce secretary said. "The truth of it is though, technology changes, China changes and we have to keep up with it."
In October 2022, the U.S. Department of Commerce's Bureau of Industry and Security announced sweeping export controls that restrict the ability of companies to sell certain advanced computing semiconductors or related manufacturing equipment to China.
"It was a bold move, but we thought it was necessary because these semiconductors are unbelievably powerful, and we can't afford to let them get into the wrong hands," Raimondo said, acknowledging that "the threat from China is large and growing."
The U.S. has said it's focused on restricting China's military, but the controls also come as both countries seek to develop their artificial intelligence capabilities in the wake of OpenAI's launch of ChatGPT.
During a defense forum panel Brennan moderated on Saturday, Raimondo also said she is working on a new way to restrict China's access to certain technologies by setting up "a continuous dialogue" between business and government engineers.
"If you redesign a chip around a particular cut line that enables [China] to do AI I'm going to control it the very next day," Raimondo said.
U.S. chipmaking giant Nvidia last month reportedly delayed the launch of a new AI chip for China that had been designed to technically comply with U.S. export controls.
What I cannot have industry do is in any way violate the intention of our export controls. Gina Raimondo U.S. Commerce Secretary
"We're in touch with Nvidia," Raimondo said in the interview with CNBC. "They are crystal clear. They don't want to violate our export controls. And you know, we want them to sell chips to China. That's fine. They just can't sell the most sophisticated AI chips to China."
When asked about Raimondo's comments on blocking certain China chip sales, Nvidia said in a statement to CNBC: "We are engaged with the U.S. government and, following the government's clear guidelines, are working to offer compliant data center solutions to customers worldwide."
Nvidia has been one of the most high-profile companies affected by U.S. export controls since its advanced semiconductors are widely used for training artificial intelligence models. The company warned in August last year it could lose $400 million in potential sales in China due to U.S. restrictions.
Raimondo told CNBC she is considering similar controls on the "most sophisticated AI and all the products that flow from that," as well as biotechnology and quantum computing.
"What I cannot have industry do is in any way violate the intention of our export controls," she said. "They have to follow the rule and the spirit of the law. And as long as they, or any company, does that, it's fine."
'Always be ahead'
U.S. President Joe Biden, who is up for reelection next year, signed a bill last year aimed at supporting U.S. semiconductor development with tens of billions of dollars.
The Chinese government has meanwhile doubled down efforts to build up its own semiconductor and tech industry.
Raimondo told CNBC "it's not realistic" to think the U.S. can stop China's technological development, but rather that the goal was "slowing them down."
"We still sell billions of dollars a year in semiconductors to China," she said. "We just cannot let them access the most sophisticated, cutting edge artificial intelligence chips."
"Ultimately, we just have to run faster. Do more, run faster, so we can always be ahead."
— CNBC's Kristina Partsinevelos contributed to this report.
Hollywood actors union ratifies new contract with studios
M embers of SAG-AFTRA, the Hollywood actors union, have ratified a new contract with the Alliance of Motion Picture and Television Producers, which represents major studios and streamers, the union said on Tuesday.
SAG-AFTRA members voted to ratify the contract with about 78% in favor. The union said about 38% of members turned out to vote.
The agreement expires on June 30, 2026.
“SAG-AFTRA members have remained incredibly engaged throughout this process, and I know they’ll continue their advocacy throughout our next negotiation cycle,” union president Fran Drescher said in a statement.
“The AMPTP member companies congratulate SAG-AFTRA on the ratification of its new contract, which represents historic gains and protections for performers. With this vote, the industry and the jobs it supports will be able to return in full force,” AMPTP said in a statement Tuesday.
The ratified contract caps a monthslong saga, which included a nearly four-month strike that had paralyzed the industry and raised existential questions over the future of the entertainment business. Hollywood actors and producers reached the tentative deal on November 8, after tumultuous negotiations throughout the year. Eighty-six percent of the union’s national board had voted to approve the tentative agreement.
SAG’s roughly 160,000-member body spent about three weeks voting on whether to ratify the deal.
The union was optimistic about the tentative deal.
When the deal was struck, Drescher called it “historic,” and the studios said the agreement “represents a new paradigm” for Hollywood, TV and the actors.
The actors union strike ended on midnight after the deal was tentatively reached, tentatively concluding one of the most disruptive strikes in Hollywood’s history.
The terms of the tentative deal did not come without controversy. Some union members criticized parts of the deal, particularly its AI protections. Some union members posted on social media with the hashtag #SAGAFTRAVOTENO, claiming there weren’t proficient protections against the emerging technology.
In contrast, 99% of the Writers Guild of America members voted to ratify their contract.
In a statement posted on the union’s site on Dec. 2, member Bryan Cranston said he was voting “yes” on the “hard-fought contract proposal.”
“No side will EVER get everything they wanted or hoped for. That is the plain truth of every labor dispute,” he wrote.
After Thanksgiving, the union released the full, 128-page contract for members to review .
SAG-AFTRA said the deal included groundbreaking raises, benefit increases and protections around artificial intelligence in a press conference on November 10.
The contract includes $1 billion in new wages and benefit plan funding and a participation bonus for actors on successful streaming shows. Drescher said the deal has a 7% raise in most minimum payments.
For the first time, the contract includes consent and compensation guardrails for artificial intelligence. Notably, the contract also protects background performers from any use of their digital replica without their consent, SAG leadership said.
The union said there will be appropriate hair and makeup services for all performers. There will also be requirements for intimacy coordinators for scenes requiring nudity or stimulated sex.
There will also be increased pension and health caps for the union’s benefit plan and funds.
Saga comes to an end
It was a long road to reach a ratified contract.
After several fits and starts, the striking actors had resumed negotiations with producers on October 2 after a prolonged absence from the bargaining table. The announcement to restart talks came a day after leaders of the Writers Guild of America voted to authorize its members to return to work following their tentative agreement reached September 24 between union negotiators and Hollywood’s studios and streaming services.
But the actors’ contract negotiations didn’t last long, breaking down on October 11 before returning later in the month.
By the end of October, it appeared the actors’ strike was approaching its final scene . SAG-AFTRA and the AMPTP had made significant progress in negotiating sessions, arriving at tentative understandings on key components of a potential deal, CNN reported.
In early November, the studios said they delivered the union their “ last, best and final offer .” But the union said in a message to its members that there were several “essential items” that the two sides had yet to reach agreement on, such as the use of AI.
On Wednesday, November 8, the actors union announced they had reached a tentative agreement, allowing actors to soon return to work. AI protections were among the last topics to get resolved, reaching a resolution the night before the deal was announced.
Divisions about AI
Unlike the writers union, which had 99% of its membership vote to ratify their deal in October, the actors were far from unanimous, signaling division among the union. After a tentative deal was reached in November, criticism emerged from members — including actress Justine Bateman and “Stranger Things” star and national board member Matthew Modine — who expressed concerns over issues including streaming residuals, self-tape auditions and most notably, protections surrounding AI.
“The idea that it might not pass or might pass at a low vote is very real,” an individual familiar with the negotiations told CNN the night before the voting deadline approached. “There is a huge amount of fear around AI.”
The new contract introduces protections around AI for the first time in history, including consent to be scanned and compensation for the use of an actor’s digital replica. But dissenting SAG members believe that the AI clauses that are intended to protect their livelihood can eventually damage their careers.
“I understand looking at the short term and feeling like it’s untenable, but this is short-sighted,” a SAG-AFTRA member who voted “no” told CNN. “If we are protecting some jobs for the next two years, but then erasing 90% of entertainment jobs in the future, we’re not just harming ourselves but our industry.”
A point of contention regarding AI provisions in the contract is surrounding the emergence of synthetic performers to take on human roles.
“We are going to be training our replacements,” this SAG-AFTRA member said.
SAG-AFTRA leadership says that the new contract provides protections from AI that are necessary to face the reality of emerging technology.
“We came from a place of making the human performance the most important thing with the reality of the understanding that AI is here. They’re already scanning people,” said Caitlin Dulany, who is part of the SAG-AFTRA negotiating committee and serves as an LA Board member.
“If you want the job, you’re probably going to have to agree to be scanned, but you’re also going to be informed of what your digital replica is being used for and get paid for the use of your digital replica,” Dulany added. “We don’t want to make it easier for them to use a digital replica instead of a human performer.”
An actor who is against the new deal told CNN that the requirement to agree to a scan to be hired is problematic. “The deal says ‘consent.’ But it’s actually coercive,” this SAG-AFTRA member said.
Despite mounting criticism, union leaders believe the advances gained in the new deal are hugely beneficial for members, noting historic increases in minimum rates for both principal and background actors. Responding to division among the membership, negotiating committee member Dulany said, “There was pressure [from the AMPTP], but we were ready to hold out. We are really excited about what we got. This contact is worth the last three contracts together.”
And despite the controversy surrounding AI, the ratified contract received a higher percentage approval than the union’s past two deals with AMPTP. The contract in 2020 was ratified with 74% approval, and the contract in 2017 with 76%.
Though the new deal had not been ratified until Tuesday, actors have been able to work under the tentative agreement ever since the strike ended.
Production has started up again across the industry with many films and television shows beginning to roll cameras shortly after the Thanksgiving holiday, in an effort to get new episodes on the air as soon as possible. Broadcast series like “Abbott Elementary,” “Law and Order: SVU,” “Grey’s Anatomy” and “Blue Bloods” went back into production the last week of November, with many targeting a January premiere date.
However, many shows will have abbreviated seasons, given the months-long production standstill. Most broadcast shows that typically air 22 to 24 episodes per season will now air 10 to 12 episodes.
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SAG-AFTRA’s Contract Will Change Self-Tape Auditions, But Some Actors Also See Unforeseen Drawbacks
Pro Available to WrapPRO members
Guild members tell TheWrap that the new terms on auditions have key reforms, but also some major potential drawbacks
Artificial intelligence is the main topic of debate among SAG-AFTRA members over the new contract, which they are set to finish voting on today, but some guild members are trying to raise concerns about another issue that was key during strike-ending negotiations: auditions.
Two guild members who spoke to TheWrap said they were pleased that the SAG-AFTRA negotiating committee was successful in adding key reforms to lift financial and logistical burdens facing actors who do self-tape auditions. But they also said the contract language that classifies such auditions could be a major hurdle in a grassroots union effort to earn contract pay, and could also have other unforeseen creative drawbacks.
In the new contract, expected to be ratified by the union this week, SAG-AFTRA secured major gains including a limit of eight pages to read for a first audition. Actors must be given at least 48 hours to prepare a self-tape — longer if it’s before a weekend — and producers must “endeavor” to respond to actors who want to know if a role has already been cast so they can decide whether they want to audition for other roles or make other professional or personal scheduling decisions.
Thomas Ochoa, a member of the SAG-AFTRA Los Angeles local board, says that while those gains are much needed, the language of the contract classifies self-tape auditions as interviews, which are not eligible for the half-day’s worth of pay that studios are required to pay per the terms of SAG-AFTRA’s bargaining agreement.
“There is nothing in the contract that explicitly says that self-tape auditions are classified as interviews, but it is the language that pushes them into a category that is not required to provide audition pay,” Ochoa said.
Along with the LA local, Ochoa is a member of a grassroots campaign within SAG-AFTRA called Auditions Are Work , which seeks to normalize audition pay in the entertainment industry. Since 1947, there has been language in the contract requiring a half-day of scale pay to be given to actors for each audition they perform but don’t book. As of the 2020 contract, that half-day pay came out to $541 per non-booked audition.
“The problem is, studios haven’t created a system to pay actors for auditions, because auditions aren’t part of an active production and therefore don’t get factored in when studios account for union costs like they would on things like paid overtime and meal penalties,” Ochoa explained.
“To get the audition pay, actors almost always have to fill out a claim for it through SAG-AFTRA, and while we’ve pushed for those claims to be granted and they sometimes do, actors can be discouraged from doing that because of retaliation” they said. “They might be branded with that awful phrase ‘difficult to work with’ and lose jobs if they push for the audition pay that we’re owed from our agreement.”
Ochoa says that they didn’t expect audition pay to be addressed in this year’s contract even during the strike, as the issue did not get included in the guild’s pattern of demands after months of membership input meetings.
But Ochoa did say they were dismayed by a clause on page 14 of the full contract, which can be read here , which says that “no compensation is due to a performer for a self-tape.” The clause also says that “performers may not be asked to memorize any materials nor be prohibited from holding sides and/or using a prompting device during the self-tape,” something that was negotiated as part of the union’s efforts to make self-tapes less burdensome for actors.
“It’s a good provision in theory, but since self-tapes no longer require memorization, they can’t be classified as auditions that require pay, just as interviews,” they said. “Also, in practice, even though the producers say they don’t require memorization, that’s what actors still often do because that’s just part of the job.”
A spokesperson for SAG-AFTRA acknowledged to TheWrap that as memorization is a requisite for any situation in which an actor is due audition pay, the new language prohibiting memorization for self-tapes excludes them from such pay. The spokesperson also noted that “half-day scale pay did not apply to self-taped auditions before this contract.”
Beyond audition pay, self-tapes have other drawbacks. Kylie Sparks, a TV actor and a captain on the Warner Bros. picket lines during the actors strike, wrote an Instagram post explaining reasons why they voted against ratifying the contract, with audition pay being one of them.
Sparks also told TheWrap that actors are concerned the contract is a sign that Hollywood is trending towards a new normal where self-tapes are the widespread standard for auditions, which can have creative drawbacks.
“Self-tapes can be convenient for actors who can’t make it to in-person auditions, but with in-person auditions, actors get a chance to speak directly to the writer and the director about the role and can get feedback on how to fine-tune their audition performance,” they said.
The new contract requires producers to provide opportunities for actors to request a virtual or in-person audition, but those would only be made available on a first come, first-serve basis aside for performers who are seniors, minors, or have disabilities.
“Auditions aren’t just for the director,” Sparks said. “They’re also for the actor to see if they’re a right fit to work with the director in terms of their approach to the work…A director and writer may like a performance from a self-tape, but then they could go to set and realize that how the actor works isn’t how they want to go.”
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Contract Change Proposal: Everything You Need to Know
A contract change proposal is a document presented by a party, such as a client, to change the terms of a contract. 3 min read
A contract change proposal is a document presented by a party, such as a client, to change the terms of a contract.
What Is a Contract?
A contract is an agreement that is legally binding between two or more interested entities. It usually outlines the benefits and obligations of all involved parties in writing. Technically, a contract can be either oral or written. However, when someone says contract, what they usually have in mind is a written and signed document. An oral contract, on the other hand, is usually referred to as an agreement.
An oral contract is as binding and enforceable as a written one. The problem with an oral contract is that when there's a dispute, evidence is hard to pin down. This is because the call for evidence usually results in one party's word against the other's. Oral contracts aren't enforceable for agreements like real estate deals or agreements that are meant to run beyond the span of one year.
Contract Change Overview
Both oral and written contracts alike can be adjusted. A contract can be adjusted only when all involved parties agree to change any of its original terms. The adjustment of a contract can be partial or complete, depending on the parties' requirements. The modification of a contract can include deleting and adding information in order to get rid of errors and properly redefine sections of it. This, in most cases, doesn't completely change the contract, but simply straightens out a section or sections of it.
When and How
Changes can be made to a contract either before or after signing. For contract changes to be binding, all involved parties must be in agreement. Changes to a contract that are not accepted by a party aren't likely to be enforceable . On the other hand, changes that are accepted by all parties are valid, binding, and enforceable.
Some written contracts may define when and how changes can be made. For instance, if you own a credit card, you signed a contract when you applied for it. The contract might have stated that the issuer of the credit card reserves the right to change the interest rate as they deem fit. By signing the original contract, you have granted the card issuer your permission to make such changes in the future.
A contract is open to amendment at any time, provided all involved parties agree to the amendment. Changes effected before the full execution (signing) of a contract are technically not changes. All changes made before parties sign a contract are considered part of the original contract. Insignificant changes in a contract can be added to the original document by hand and signed by the involved parties. On the other hand, significant changes to a contract have to be reprinted and signed again.
It's important for a change made to a contract to be in writing. That way, it can be added to the written contract as an attachment. Usually, a contract would specify that future changes be put into writing. Therefore, it's important to adhere to such a condition.
That notwithstanding, the need to make changes in writing isn't always enforced in court. The reason one court gave for this was that parties aren't allowed, even by a written clause in their contract, to deny themselves the authority to change or call off their contract by a later agreement. Therefore, a contract that is written may be changed by the involved parties in any way they deem fit.
However, written changes are still a welcome idea because they allow all parties to be in agreement about the definite terms of the amendment. Written amendments, like written contracts, have several advantages that oral ones don't have. State law requires some kinds of amendments to compulsorily be in writing. For instance, amendments to intangible or tangible property transfer and certain monetary contracts are required to be in writing.
Some Reasons for a Change in Contract
Some of the common reasons that make contract modification necessary are:
- Need to change contract duration
- Need to change the number of items required
- Need to add or subtract required goods
- Need to modify terms of payment
- Need to modify terms of delivery
- Change in statutory requirements
- Court order
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