10 Steps to Amend a Legally Existing Contract

The contracts are the foundation of many legal and business relationships. However, the changes in circumstances, which sometimes occur in the future, necessitate adjustments of the agreements in force. These alterations are mostly made by amendments. Through this blog, you will be learning about the basic steps to make alterations to a contract as well as information on contract validity, amendments, and addendums, and things you should not do.

Essentials of a contract

Before making changes to an existing contract, it’s important to understand the fundamental elements that make a contract legally enforceable:

• Offer and acceptance: It is one where one party proposes to do something or not to do a particular act that the other party agrees to.

• Consideration: According to the legal definition of contracts, each party must contribute something of value that the other party needs regardless of whether it is service, money, or products.

• Intention to create legal relations: In capacity, all the parties to the contract must have the requisite intention to be legally bound by the contract.

• Capacity: Each party has to be capable of entering the contract legally (be of a certain age, have a sound mind, etc.).

• Free consent: It should not have been procured through misrepresentations, coercion, undue influence, fraud and mistake.

• Legality of purpose: The contract has to be related to the legal action or subject matter.

It is important to know these essentials because they provide a basis for any subsequent changes.

What is an amendment to a contract?

Amendment means alteration made to an existing contract especially with the intention of the change, addition or deletion of some of the provisions of the contract. An amendment further aims at perfecting the contract such that the parties’ current intentions are understood and upheld while not altering the substantive terms of the contract. It is usually applied where the terms need to be modified in response to changed conditions or in connection with certain unpredictable movements.

For example, one might modify a contractual relationship, adjust terms of payment, delay delivery due date or define responsibilities again.

Interpreting addendum and the distinction between amendment and addendum

An addition is not the same thing as an alteration or amendment for it simply incorporates upon the initial agreement new provisions that have not been included before. It is also worth noting that while both amendments and addendums are seen in use very often, they are applied in quite different situations.

Difference between amendment and addendum:

• Purpose: An amendment is a modification of the existing terms while an addendum introduces new terms that would not in any way alter the prior terms.

• Scope: Modifications concern clauses that require adjustments, and addendum are extra provisions or provisions added to the contract.

• Formality: Amendments and addendums are reached with coordinates of the parties involved by signing them, whereas amendments revise the present terms and conditions, but addendums retain the old terms and conditions.

• Timing: An amendment modifies the content of the existing contract when earlier provisions are not relevant to a new context, while an addendum is simply a way of enlarging the scope of the existing contract by incorporating new clauses.

• Impact: Additions modify no aspect of an already existing agreement; rather, they only provide additional details to an already existing agreement while amendments alter or provide a substitute for a part of the existing agreement.
  
  

10 Steps to amend a legally existing contract

Amending a contract can seem like a daunting task, but by following a structured approach, you can ensure the process is smooth and legally sound.

Step 1. Review the existing contract

Before making any changes, carefully review the original contract. Identify which sections need to be altered, and check whether the contract contains an amendment clause that dictates how changes should be made.

Step 2. Check for amendment provisions

Many contracts have an "amendment" or "modification" clause, which outlines the process for making changes. It may specify that any changes need to be in writing and signed by both parties.

Step 3. Obtain mutual agreement

Amendments require the agreement of all parties involved. Ensure that the other party or parties agree to the proposed changes before moving forward.

Step 4. Draft the amendment

Once there is consensus, draft the amendment document. Clearly state the specific clauses being amended, the new terms, and how they replace the old ones. Reference the original contract by its name and date for clarity.

Step 5. Be specific about changes

The amendment should clearly outline the specific changes being made, whether it's adding, deleting, or modifying terms. Vague language can lead to disputes, so it’s important to be precise.

Step 6. Ensure legal compliance

Ensure that the changes for which you propose do not infringe the law. Depending on the nature of the contract as is the case with employment or lease agreements, there are usually legal formalities involved and so legal advice may need to be sought.

Step 7. Include an effective date

Include the date by when the amendment will be enforced. This assists in avoiding such cases of misunderstanding the date of start of the new terms so that all the parties involved understand the changes that have been made.

Step 8. Get the amendment signed

Specifically, for the amendment to be legal, all the signatories have to agree to it. Some amendments may also have to be made notarized depending on the type of contract involved and the legal system involved.

Step 9. Make and circulate papers to all the parties

It is only necessary to provide each participant with a signed copy of the proposed amendment. Make sure you have a copy as well as everyone else has a copy of the new amended contract which has the changes attached.

Step 10. Update internal records

When the change is made to the amendment, ensure all records within the organisation are to reflect the changes made. It also allows all the parties to be dealing with the most current version of the contract.

Things to avoid when modifying a contract

• Failing to review the original contract: These matters should always be reviewed with a lot of care before any amendments are made to understand the effect of such amendment.

• Not getting proper agreement: All the amendments must be signed by the involved parties and every person agreeing on the change must sign on the amendment.

• Using vague language: It is essential to be precise when you are making the changes. Vague language in the contract may also create controversy in the future.

• Ignoring legal compliance: Make certain that amendment is in line with the existing laws and regulations.

• Failing to update records: Once the amendment is signed, then make sure to make amendments to the records you are keeping and inform any other stakeholder.
  
  

Conclusion

To alter a contract is essentially important when making contracts to guarantee that they retain legal binding and validity in the long run.

Based on the tips provided in this blog from reviewing the existing contract, obtaining signatures, and updating records, you can amend contracts without problems following these 10 simple steps. In order not to have conflict, always make sure that both parties agree with what is being done and the process is legal.

FAQs

Can any contract be amended?

Yes, but in most cases, change is possible provided the new change is allowed in the particular contract that was signed and agreed upon by all the parties concerned.

Is a verbal amendment valid? 

Commonly, amendments must be in writing particularly in instances where the main and existing contract terms provide that amendments are to be in writing.

What if the other party does not agree to the amendment?

If the parties are unable to mutually agree, the terms of the original contract prevail, until there is some other legal procedure initiated.

Can an amendment be retrospective? 

Yes an amendment can commence from the prior date if all the parties to the contract agree, but this must be indicated in the amendment document.

Is it required to hire a lawyer when one wants to make changes to a contract? 

It is also recommended but not necessary to seek the assistance of a legal practitioner in order to ensure that the amendments made do not contravene the law or do not compromise your stance.