Free Amendment of Agreement Template

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Amendment of agreement: How-to guide

Change is an inevitable part of life, and the dynamic business world, governed by legal regulations, is no exception. Agreements and contracts serve as the skeletal framework of legal documentation and are frequently subject to change with growing businesses, changing ownership, or new rules and regulations. Changes such as adding, deleting, or correcting existing clauses or information may sometimes be required in a contract or agreement.

To amend a contract or business agreement requires continuous communication between two or more parties, careful planning, and technological expertise. This guide will explore the intricacies of modifying agreements to help you achieve optimal productivity.

What is an amendment agreement?

An amendment agreement is used to amend or change the terms of an existing agreement between one or more parties. It documents revisions such as additions or deletions to the terms and conditions of an active agreement. 

An amendment agreement outlines the specific details of the changes made to the original agreement and explains them. 

To make an amendment agreement legally enforceable, all parties must agree to the changes in writing, with a signed and dated copy. This process ensures that any changes to the original terms of the agreement require the consent of all parties involved.

What is the difference between an addendum and an amendment agreement?

An addendum typically provides additional information without altering the original version of the document's terms. On the other hand, amendments introduce significant changes to the original agreement's terms. 

Addendums help add supplementary details, such as clarifications, schedules, or attachments.

When to use an amending agreement?

It's a good practice to use an amending agreement when you need to change the terms of an existing agreement. 

• It will help you keep your original signed contract intact.
• Ensure that you've obtained the consent of all parties involved through their signatures and that they've mutually agreed upon change.
• Make your changes legally binding.
• Maintain a written record to refer to in case of misunderstandings.

When is an amendment agreement required?

It's easier to create an amendment than an entirely new agreement from scratch. An amendment agreement may be required if only some changes are needed in an agreement, simplifying the process of making changes, however major or minor they may be.

The U.S. Constitution is a great example, as it has been amended 27 times since 1789, according to the list of amendments compiled by Britannica.

Why is an agreement or contract amendment required?

There are several reasons why an agreement or contract amendment may be necessary. Some of the most common scenarios include:

• If either party can't fulfill the terms of the original agreement, it should be modified to reflect the new practices. 
• Amendments can also be used when certain aspects of the agreement need to be revised, otherwise limiting the parties' ability to reach an agreement. 
• At times, external factors beyond the parties' control, such as a global pandemic, may necessitate a contract amendment.

What are some examples when an amendment of agreement is needed?

Some instances when an amendment of agreement can be required are:

• Revising a landlord's or tenant's obligations in a residential rental/lease agreement: Suppose the tenant in your rental property gets a new pet (a dog or cat). According to its terms and conditions, a pet fee might be added to the existing rental agreement. Thus, the need for an amendment agreement arises.
• Changing the job description/employee/benefits in an existing employment contract: Employers may be required to update an employee's job description to reflect changes in their role owing to a promotion or extension of the contract. This may include changes in their compensation or benefits package. Here, an amendment can be made to the existing agreement.
• Hiring an independent contractor: Hiring an independent contractor or extending a freelancer's contract in a service agreement may require adding details to the project's scope of work. This can be done by amending an existing agreement.
• Altering a loan agreement: If the payment amounts or due dates need to be changed, it's a good idea to amend the loan agreement.

What critical information should be included in an amended agreement?

When amending a contract, in addition to the amendments, it's vital to include the following information:

• The names of all the parties involved
• The original execution date of the agreement
• The purpose of the original agreement
• The effective date of the amendment
• The section(s) of the contract being changed 
• The nature of the change (addition, deletion, or edit)
• If applicable, include the subsection numbers and names from the original contract.
• Though it's recommended to keep the number of times an agreement is changed to a minimum, the number of times the amendments are made should also be recorded.

What are the key aspects when amending a contract or agreement?

1. Examining the existing version

It's crucial to check the existing version before amending a contract. Usually, there will be a clause that states how the parties may amend the current agreement. For instance, a contract may be revised, added to, or altered with the mutual consent of the parties in writing.

2. Listing the necessary changes to an existing contract

Once the process for amending the contract has been established, the next step is to make the necessary changes. 

For minor changes, the party making the amendment may mark the provisions with red ink and make handwritten changes. Both parties must initial and date every modification to indicate their approval. 

For significant changes, the parties involved can create a new document that outlines the sections to be modified, portions to be removed, definitions to be updated, and new clauses to be added. The new document must include the date the amendment took place and the original agreement's date and title.

3. Getting approval from the parties

After the amendments have been finalized and a written amendment agreement has been prepared by the parties involved, it will be signed by all parties as a formal indication of their approval of the changes.

4. Executing the amended contract

Any changes to the original agreement must be documented and kept on record to show that the contract has been altered and is no longer a complete representation of the original agreement. This is important for anyone who may need to refer to them in the future.

Understanding the clauses of the amendment of the agreement

Purpose

In this clause, mention the purpose of the amendment for which the parties are entering the agreement. This confirms the parties' agreement that they're all on the same page regarding the amendment and provides a clear understanding. Also, mention the number of times the agreement has been amended, such as first, second, third, or more. 

Amended provisions

This clause ensures that the amended section(s) of the agreement will be known by its new name.

Term

This clause indicates that the amendment will be effective through the term of the original agreement unless terminated at an earlier date under the provisions of the original agreement or by law.

Inconsistency

It's essential to be careful when making changes to an agreement because sometimes, even a small change in one part of an agreement can have unintended consequences. For instance, you might accidentally add something that contradicts what was initially agreed upon. This section ensures that if there is any disagreement or conflict between the amendment and the original agreement, the amendment language will take precedence and be considered the final word.

Agreement continuance

This section confirms that except for those terms and conditions expressly modified and supplemented by this amendment, all other terms and conditions in the original agreement remain effective and binding for the parties.

Counterparts; electronic signatures

This clause states that regardless of where the parties sign the amendment or how they transmit signatures (via electronic devices such as computers or fax machines), all the separate pieces will be considered part of the same instrument. This provision allows business to be conducted efficiently across different locations while maintaining the agreement's validity.

Severability

This protects the terms of the amendment as a whole, which means that even if part of an amendment is found invalid, illegal, or unenforceable, it will not affect the rest. For example, if a state law is passed prohibiting faxed copies of signature pages, it will not undo the entire agreement. Instead, only the references to faxed copies of signature pages would be deleted, leaving the rest of the agreement unchanged. 

There is an exception in this section. If an essential part of the agreement is invalidated, the agreement may terminate. For example, if a law is passed in your state saying that amendments are prohibited, the purpose of the amendment is lost. In such cases, the agreement will probably be invalidated.

Waiver

A “waiver” occurs when one party does something that gives up a right that they have. This can take written form or can be some kind of action. For example, assume your amended language states that a company must pay a manager within ten days after it receives an invoice. If the company doesn’t do this and the manager doesn’t insist on it, the manager is said to have “waived” its right to require this deadline. 

This section states that any changes to the amendment are only effective if such changes are made in writing and signed by the parties. This means that in the example just provided, the manager has not waived its rights. It did not make a written waiver– the waiver was the action that the manager took. 

Entire agreement

This section confirms the parties' agreement that this amendment and the original document they're signing is "the final agreement" about the subject. It's the complete and exclusive expression confirming that the parties agree to the subject matter. For example, if the parties had exchanged letters that contradicted provisions in the agreement, those documents wouldn’t be considered part of the agreement.

It also clarifies that all prior communications, negotiations, and agreements between the parties on the subject matter of the amendment are merged and superseded by this amendment and that there are no conditions present prior to this amendment's effectiveness unless set forth expressly in this amendment. 

Headings

This section explains that the headings at the beginning of each section and subsection of this amendment are meant to organize the document conveniently. These labels are meant to help as you’re skimming the document or searching for a specific section. The headings shouldn't be used to interpret or construct the clauses. 

Effectiveness

This clause indicates that the amendment will become effective when all parties have signed it. However, the amendment will become effective when the last party signs it, and the date of the amendment will be the date of the last party's signature.

Necessary acts; further assurances

This clause highlights that each party shall put all reasonable efforts and appropriate actions into making this amendment and the transaction surrounding it effective. It explains that even if a party is not specifically required to sign a document or take some action by the amendment, the other party can insist on it if it’s needed to make the amendment effective. 

This allows the parties to make an agreement that doesn’t list every possible act that will ever need to be taken. If an act becomes necessary to make the amendment effective, this section requires the parties to perform that action. Note that this applies only to reasonable acts: a party will not be required to do anything and everything possible to make the amendment work.

Frequently asked questions

What does an amendment of agreement mean?

Sometimes, making specific changes to an existing contract might be inevitable. Whether adding new clauses, removing existing ones, or correcting errors, the most optimal and streamlined approach is to create an amendment. An amendment supplements the original contract, allowing for the necessary modifications without creating an entirely new agreement.

What information is needed to complete an amendment of the agreement?

The information required to complete the amendment of the agreement is as follows:

• Details of the original agreement: Include its name and the date the document took effect
• Details of the recipient: Get the name and contact information of the individual or business receiving this document
• Subject matter: Prepare the changes you want and keep them ready

Is it better to make an amendment or create a new contract?

Making a new contract is often labor-intensive and time-consuming. A new agreement is recommended when the previous amendments are significant in number and will significantly impact the original arrangement.