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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; 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.
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 quick 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, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Yes. 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.
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