Modifications versus Amendments: When and How to Use Them In Contracts
Fair, strong, and legally sound contracts are the foundation of all creative businesses, but sometimes, it may take some negotiation to get to that perfect agreement. In fact, I can almost guarantee that there will be instances when you or your client want to change a part of your existing contract - especially during a global pandemic.
The two primary ways to edit or change a legal contract are modifications and amendments. In layman’s terms, these two words may seem synonymous. But in contract law, these two words are distinct, and misusing them can potentially result in a void contract and legal ramifications.
WHEN A MODIFICATION TO YOUR CONTRACT IS APPROPRIATE
Small changes to contracts, like editing out a misspelling or changing a date, can be fixed with modifications. Modifications change aspects of the agreement that do not alter the overall meaning or substance of the provisions in the agreement. Instead, a modification helps to clarify mistakes that both parties agree should be fixed. In short, all a modification requires is the original term crossed out and corrected, and the signatures of each party to indicate agreement of the change.
WHEN TO INCLUDE AN AMENDMENT TO YOUR CONTRACT
Generally speaking, bigger changes than the ones mentioned above will require you to amend the entire contract agreement - and a grey area can arise in determining what a “bigger” change is. Contract amendments work to improve the contract on behalf of either or both parties, usually through the inclusion of more specific phrasing or clear distinctions not originally set forth by the initial agreement. Think of amendments as changing the spirit of the agreement, rather than simply correcting an obvious discrepancy.
Amending a contract is a much longer (but necessary) part of editing contracts, as the process lets parties add completely new terms, modify existing terms, or delete entire provisions after the initial signing of a contract agreement. In order to do so, you must follow the steps set forth in your amendment provision in your original contract. Again, because this can be a tricky and nuanced grey area of the law, oftentimes, best practices are to play it safe for both parties and begin again with a new contract.
Remember, it is normal that you and your clients are going to want to modify contracts from time to time. Instead of dreading these changes, use this as an opportunity to negotiate the best terms for both parties involved, and arm yourself with the contract knowledge you need to create a re-negotiated, legal contract.
