In Short
Amendments to contracts can be made through either an amendment deed or a contract addendum, each serving different purposes. An amendment deed is used to modify existing terms, while an addendum adds new terms to the original agreement. Choosing the correct method depends on the nature of the change and how the original contract was executed.
Tips for Businesses
When modifying a contract, ensure that both parties clearly consent to the changes. If the original contract was signed without witnesses, a simple written agreement may suffice for amendments. For more formal or significant changes, such as those involving land, an amendment deed should be used, meeting the formalities required for deeds under UK law.
Summary
This article explains the differences between amendment deeds and addendums for businesses in the UK. LegalVision, a commercial law firm, specialises in advising clients on contract variations and provides guidance on ensuring that amendments or addendums are legally enforceable.
Your business may need to change the content of a contract. Two common ways of doing so are through an amendment deed or contract addendum. Both achieve the same goal but apply in different circumstances. This article will explain the differences between a contract addendum and an amendment deed to ensure your business uses the correct method of contract adjustment.
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Why Amend the Wording of a Contract?
It is uncommon for parties to agree to a deal and then wish to amend the wording of the original contract. However, there are various uncontroversial reasons why this may be necessary. For example, you might need to:
- correct errors or serious spelling mistakes;
- change a date or figure due to the parties changing their minds;
- reflect new commercial terms or arrangements; or
- add further detail that the parties agree to after signing the contract.
Both an amendment deed or contract addendum can amend a contract. However, they do so in different ways and suit different situations. Let us explore this further below.
What is a Contract Addendum?
An addendum is an additional document that adds wording to the original agreement. Its typical use is to add something to the original document rather than correcting or refining the original language.
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What is an Amendment Deed?
An amendment deed alters the content of the existing agreement. Therefore, an amendment deed aims to clarify and correct the original wording rather than introducing additional terms.
So, let us continue the company car rental example. Suppose your business wishes to hire a Mercedes as a company car for 12 months. The parties fail to notice that the written agreement records a Mazda as your company car for three months. On the eve of the vehicle’s delivery, you see the error, and the hirer agrees to amend it.
The easiest way of amending the contract would be a quick amendment confirming that you should read references to ‘Mazda’ as ‘Mercedes’ and mentions of ‘3 months’ as ’12 months’. This is simpler and quicker than trying to add content through an addendum and is the legal equivalent of striking the incorrect words and writing the correct word next to them.
How to Execute an Amendment or Addendum
Whether you use an addendum or an amendment deed also depends on how the original contract was executed. If the original contract was executed as a simple contract (i.e., signed but not witnessed or sealed), then a written agreement signed by both parties is typically sufficient for amendments. However, if the original agreement was executed as a deed – for example, where the contract involves no consideration or concerns land – then the variation should also be executed as a deed to ensure legal enforceability.
An amendment deed must meet the formalities required for deeds under section 1 of the Law of Property (Miscellaneous Provisions) Act 1989. This includes being in writing, clearly stating it is a deed, and being signed and witnessed correctly. These formalities make amendment deeds more appropriate for legally significant or sensitive changes to contractual terms. It is important to ensure that the right person witnesses your document.
In practice, when drafting either document, it is crucial to clearly reference the original agreement, outline the specific clauses being changed or added, and ensure all parties formally consent to the modifications. This avoids uncertainty and reduces the risk of future disputes about contractual intent or enforceability.
Change of Agreement Example
Let us consider one last example. You sign a contract with another company to purchase 20 laptops for £400 each. However, after signing, you speak with the other company further and learn that they will sell you 30 laptops for £300 each. You both agree this is a better deal.
The best method of amending the contract would be through an amendment deed. This is because the amendment deed can quickly replace references to ’20’ as ’30’ and statements of ‘£400’ as ‘£300’. The parties do not wish to add brand new information but clarify the existing contract.
Key Takeaways
In summary, contract addendums and amendment deeds are different ways of achieving similar goals. A simple explanation of the difference between them would be that an amendment deed could change the purchase price between a contract. On the other hand, you require an addendum to add a purchase price where none exists within the original contract. An addendum, therefore, adds additional content to contracts, while an amendment deed simply amends the content of the existing document.
If you need help with contract amendment by way of an addendum or amendment deed, LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced contract lawyers help businesses across industries manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Yes. One option is an amendment and restatement deed, while another is simply to terminate the first contract and replace it with a new one.
No. The main point of a contract is that its content is fixed once signed and provides the signatories with certainty. Thus, amending a written agreement is usually done to fix errors with the initial wording or reflect additional information agreed upon by the parties after signature.
Not always. If the contract includes a “no variation” clause, changes must follow the specified process – usually requiring written agreement signed by all parties. UK courts have upheld such clauses, so it’s essential to check the original contract first.
Yes. For the variation to be valid under UK law, all original parties must sign the document unless the original contract allows otherwise. Without unanimous agreement, the change won’t be enforceable.
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