Addendums vs. Amendments: What’s the Difference?

Key takeaways:

• A contract amendment is a formal alteration or modification made to an already signed contract.

• A contract addendum is an additional document that is attached to the original contract.

• The decision to use an addendum or an amendment depends on the nature of the changes being made. If modifications are substantial and affect the core terms of the agreement, it is generally appropriate to use an amendment. If the changes are relatively minor and do not impact the fundamental aspects of the contract, an addendum is the right choice.

Contracts are vital in establishing the rights and obligations between parties involved in an agreement. However, sometimes modifications or additional provisions need to be added after the contract is signed. In such cases, it is crucial to understand the distinction between a contract addendum and a contract amendment, as they serve different purposes and have different implications.

Read on to learn about the differences between addendums and amendments, when to use each one and how to create them.

This blog post is offered for general information purposes only. It does not constitute, and is not a substitute for, legal advice.

What is a contract amendment?

A contract amendment is a formal alteration or modification made to an already signed contract. It is used to change, delete or add specific terms or provisions within the original agreement while leaving the rest of the document intact.

Because this type of change is made to an existing contract, all parties must agree to the contract amendment before it can be added to the document. This can happen for many different reasons: shortening or lengthening the term of the contract, modifying payment terms or any other updates that reflect changing circumstances.  

What is a contract addendum?

A contract addendum is an additional document that is attached to the original contract. It is used to include supplementary information, such as additional terms, conditions or provisions.

Unlike an amendment, a contract addendum does not modify the existing terms of the contract, but rather it expands upon them. Addendums are typically used when parties wish to incorporate new details without disrupting the core elements of the original agreement. 

When to use an addendum vs an amendment

The decision to use an addendum vs an amendment depends on the nature of the changes being made to the contract. If the modifications are substantial and affect the core terms of the agreement, it is generally appropriate to use an amendment. For instance, changing the pricing structure, extending the contract duration or altering key obligations would call for an amendment.

On the other hand, if the changes are relatively minor and do not impact the fundamental aspects of the contract, an addendum is the right choice. Adding a new product option, specifying additional delivery instructions or including a non-material clause are all common circumstances for using an addendum.

Who can make an addendum vs an amendment?

Both addendums and amendments require the consent and agreement of all parties involved in the original contract. Any party to the contract can propose an amendment or an addendum, but it is necessary for all other parties to agree to the proposed changes before either an addendum or an amendment can be added. The process often involves negotiation and discussion among the parties to reach a mutual understanding, just like the original contract negotiation process.

Some contracts may include specific provisions regarding the process of making amendments or addendums. In such cases, the contract terms should be followed.

How to make amendments and addendums

The processes for creating amendments and addendums are similar but there are notable differences.

Contract amendment process

1. Review the original contract. Carefully examine the existing contract to identify the sections or terms that require modification.

2. Draft the amendment. Clearly state the changes to be made, including the specific sections or provisions being altered. Ensure that the amendment language is precise and does not alter any other parts of the contract.

3. Obtain agreement. Share the proposed amendment with all parties involved, allowing them to review and provide their consent to the changes. Document any discussions during the negotiation process.  

4. Execute the amendment. Once all parties have reached an agreement, each party should sign and date the amendment. All parties should keep copies of the original contract, as well as the executed amendment, for future reference.

Contract addendum creation process

1. Identify the need for an addendum. Determine the additional information or provisions that need to be included in the contract and confirm that they can be included without altering the existing terms.

2. Draft the addendum. Clearly state the new information to be added. Ensure that the language is clear, concise, and consistent with the original contract.

3. Obtain agreement. Share the proposed addendum with all parties involved and allow them to review and provide feedback as necessary. Any discussions or revisions should be properly documented.

4. Attach the addendum. Once all parties have agreed, the addendum should be attached to the original contract. Each party should sign and date the addendum. Retain copies of both the original contract and the attached addendum.

Understanding the distinction between a contract addendum and a contract amendment is crucial when modifications or additional provisions need to be made to an existing agreement. While an amendment alters the core terms of the contract, an addendum provides supplementary information without changing the original content.