What is Contract Addendum?

A contract addendum is an attachment, in the post-signature stage, that either modifies the contract partially or significantly alters some of the terms of previously established contract clauses. 

Addendum, as the name suggests, is an additional document. Usually, the amendments mentioned in the contract addendum add something new to a pre-existing signed document. Once all contracting parties agree to an addendum, it becomes a part of the new contract.

Contract Addendum vs Contract Amendment

A contract addendum is a document mentioning amendments to the original signed contract. All contracting parties need to sign and approve the modifications or changes in terms and clauses to legalize the contract amendment. 

A contract addendum is NOT the same as a contract amendment. Addendums are a form of amendment, but they follow a different procedure. The purpose of contract amendment is to modify pre-existing or multiple contract clauses and change an original contract. 

On the other hand, the purpose of the contract addendum is to attach the outline of changes in the contract to the original contract. The amendment is done with redlining where all parties sign on the changes, whereas an addendum states the changes in a separate document, and then all contracting parties sign off the changes. 

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Points to Ponder while Drafting a Contract Addendum

Ensure that your addendum follows the terms of the original contract. They are typically used in the cases of:

• Amendment in date
• Extension of the contract deadline
• Enhancement, addition, or elimination of any term or clause
• Modification in  any description of the statement

When writing your addendum, follow these guidelines:

• Format
  • Not mandatory though highly advisable, to use the same font style, font size, and margins as in the original contract.
• Name and Date
  • Mention the name of the contracting parties, same as mentioned in the original contract. Reference the original contract by name and date, with a title that makes it clear that this new document is an addendum.
  • Mention both date of inclusion of the addendum and its effective date using the same date format used in the original contract.
• Amendments
  • Concisely but clearly describe the desired changes.
  • Indicate the elements of the original contract that the addendum intends to change. You can highlight amendments by using the italic and bold font. and strikethrough.
  • In case of more than one change, number the amendments.
• Conclusion
  • Add conclusion to ensure the addendum cannot be tampered with or altered.
  • Add a signature block with spaces for both (or all) parties to sign along with titles.
  • Add a notary block.

Remember, an addendum is used to incorporate small changes. However, when the amount and extent of changes are significant, one may need to change the entire structure of the contract or create an entirely new contract. In either case, have the legal team review any addendum or amendment to ensure contract compliance at all stages. 

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