Contract Amendment: Everything you need to know

A contract amendment is a mutually agreed change to an existing contract between parties. 

Learn everything you need to know below, including how to draft a contract amendment and learn the differences between contract amendments and contract 

addendums. 

When and why should you amend a contract?

One of the main purposes for making a contract is to establish and formalise a relationship by clearly defining the terms and obligations. In other words, a contract outlines the rights and responsibilities of each party,  ensures all parties understand what they are agreeing to avoid any misinterpretation. 

However, a contract needs to be amended where a business relationship between two parties no longer aligns with the initial contract or external factors that significantly affect the agreement. Additionally, there is no specific time or legal requirement regarding when you're able to amend a contract. It should therefore happen at any time when you or the other party wants to make changes to the terms of the contract.

Depending on the needs of the parties, below are some amendment examples: 

• Contract duration – the length of time the contract will be in effect 

• Service or product pricing – this pertains to the fees or charges for the goods or services provided under the contract

• Responsibilities and liabilities - the duties of one or both parties, adjusting the allocation of risk between them 

• Shipping or delivery times - involves specifying the expected time frames for shipping or delivery, and may include provisions for extending or shortening these periods 

How to amend a contract?

Here are the essential elements involved in amending a contract. Follow these guidelines when creating a contract amendment: 

Step 1: Determine the changes or Party

When writing a contract amendment, it is essential to determine the changes that need to be made and which party is requesting the amendment. The amendment needs to clearly state the parties involved, the date of the original contract, and any other relevant details. Please click here to download a contract amendment template.

Step 2: Notify the other party

It is essential to notify the other party about the proposed changes - communication can be made through various means, such as email, letter, or online meeting. This ensures that both parties are aware of the proposed changes, and it gives them an opportunity to review and make any necessary changes before signing the contract.

Step 3: Draft the Amendment 

Draft the amendment, clearly state the specific parts that are being modified and how they affect the original contract.The language of the amendment should be clear and concise, avoiding overly complex language that may be difficult for non-lawyers to understand. Any new or revised terms should be clearly defined and explained. 

Step 4: Sign the Amendment

The contract should be reviewed and signed between the parties to make it legally binding, indicating their agreement to the changes made. Furthermore, William Tishkoff, an attorney at Tishkoff PLC, emphasised that it may be beneficial to have a lawyer review it to ensure it complies with any relevant laws and regulations, and that it protects everyone's interests. To avoid confusion, keep the amendment with the original contract. This ensures that anyone reviewing the contract in the future will be aware of the changes that were made. While a contract amendment can be a powerful tool, it must be used properly to be effective. It is important to understand the legal implications of any changes you make to a contract, and to ensure that those changes are clearly communicated and agreed upon by all parties involved.

Changes to contracts can have significant implications, and it is crucial to understand them fully before agreeing to anything.[1]

Frequently Asked Questions 

Can an amendment override the original contract entirely? 

Yes, an amendment can override the original contract in its entirety. However, parties should carefully consider the implications and potential consequences of such a decision. Amending the entire contract may result in unintended complications and conflicts. It is important to note that for an amendment to be valid, it requires the same level of execution and formalities as a contract. When substantial amendments are required, parties may consider executing a new contract instead of replacing or deleting provisions of the existing contract.

What are the advantages of using a Contract Amendment instead of creating a new contract? 

There are several advantages to amending a contract rather than creating a new one [1]:

1. Simplicity and Efficiency: Amending a contract is typically quicker and more efficient than drafting a new contract from scratch. It allows you to make necessary changes without having to renegotiate the entire agreement.

2. Preservation of Original Terms: An amendment allows you to change specific terms while leaving the rest of the contract intact. This is particularly useful when most of the original contract still serves its purpose, and only a few specific changes are required.

3. Cost-Effective: It is usually less expensive to draft and review an amendment than a new contract. This is because amendments typically involve fewer terms and conditions, thus requiring less time and resources.

4. Continuity: An amendment maintains the continuity of the original contract. It preserves the original contract's effective date, which can be important for various legal and business reasons.

5. Relationship Management: Amending a contract can be less disruptive to the business relationship between the parties involved. It demonstrates a willingness to work within the framework of the existing agreement, rather than starting over. However, it is worth noting that if the changes are substantial or numerous, it may be simpler and clearer to draft a new contract. Any changes made to a contract, whether through an amendment or a new contract, should be reviewed by a legal professional to ensure they are legally sound and in the best interests of all parties involved.

Can amendments be made orally, or do they need to be in writing? 

In some cases, oral amendments to a contract may be recognized and enforced if there is sufficient evidence to prove the existence and terms of the oral agreement. For example, if both parties clearly and unequivocally agree to an oral amendment and conduct themselves accordingly, it may be possible to enforce the amendment. 

However, most commercial contracts typically contain a clause known as a "no oral modification" or "NOM" clause, which specifies that the contract may only be amended in writing and signed by the parties involved. The purpose of this clause is to prevent any informal or unintentional oral changes to the contract that may lead to misunderstandings or disputes. 

Can amendments be amended or revoked? 

Yes, contract amendments can be further amended or revoked, but the specific procedures and requirements for doing so may depend on the terms of the original contract and the nature of the amendment. To amend or revoke an existing amendment, parties typically need to follow a similar process as they did for the original amendment. However, it is important to avoid amending previous amendments or making multiple amendments, as this can cause confusion. If the changes become too extensive, it's better to create a new contract altogether. As always, it's advisable to consult with a legal professional when drafting a contract amendment to ensure all bases are covered [2] 

[1] William Tishkoff, Attorney, Tishkoff PLC.

[2] Laura Wasser , Attorney and Chief of Divorce Evolution at Divorce.com