One of the primary purposes of contract is that it keeps a record of the rights, responsibilities and promises made by each party. But what if we need to change the promises we've made? Can you amend a contract?
In this article we'll look at when you might need to make a change to a contract, and how to do that – both before and after it’s signed.
What's a contract amendment?
A contract amendment is exactly what it sounds like – a change to an existing contract that both (or all) sides agree to.
Amendments can be changes to anything in the original contract’s terms, clauses, sections, or definitions.
What is the purpose of a contract amendment?
The purpose of a contract amendment is to allow parties to make any mutually agreed changes to an existing contract, whilst also ensuring that the unaffected terms in the original contract remain effective.
There are lots of reasons why two or more parties might want to amend a contract in this way. It might be because you forgot to include something in the original version. Or it might be because you or someone else’s situation has changed since you signed it.
For example, during the COVID-19 pandemic, people have had to amend contracts to cover things like supply shortages, empty offices, or new government guidelines changing the way they do business.
Common types of contract amendments
But what does a contract amendment look like, and how might parties decide to change their contract? Some common examples of when you might choose to amend a contract include:
- To extend or shorten its length (the “term”)
- To change prices or fees for a product or service
- To change parties’ liabilities
- To extend or shorten time periods e.g. delivery or shipping times
Common questions about contract amendments
Before we dive into when and how contract amendments can be made, it's important to answer some of the questions we often hear about contract amendments, particularly about what a contract amendment is, and is not.
What is the difference between an addendum and an amendment to a contract?
While an amendment changes the actual terms of the contract, an addendum keeps all the original contract terms in place and adds new ones. It’s important not to confuse addendums and amendments as, unlike amendments and variations, they are different things.
For example, if you decide to get a new product from a supplier, you could add the details of this as an addendum to the original contract. Everything else in the contract stays the same and applies to the original product you were buying from the supplier.
You can easily add addenda (that’s the plural) to a contract in Juro as attachments.
What is a contract variation?
You might hear people talk about a “contract variation” (especially in employment contracts) rather than a contract amendment. They’re the same thing – but to avoid any confusion it’s probably best to stick to “amendment” as a term. To vary a contract, just follow the process we go on to discuss below.
What is a contract appendix?
Appendices usually appear at the end of a contract. Unlike an addendum they don’t change or affect the contract’s terms in any way – they just add extra information about it that you need to know. That could be a document explaining what certain words in the contract mean, or something specific like benefits or share options you’ll get when you sign an employment contract with a particular company.
When can you amend a contract?
Can you change a contract before it is signed?
Can you change a contract after it is signed?
Unfortunately, it can be more difficult to amend a contract once signed, but it is still possible. This is because once a contract is signed, it’s legally binding. Therefore, everyone involved in the contract must agree to any amendments you wish to make. And you’ll need to check the changes you’re making are clear and specific so everybody understands them, just like ordinary contract terms.
A lot of business contracts already include a clause stating how to make amendments – it’ll probably say something like “This Agreement may only be amended, supplemented, or modified by the mutual written agreement of all the Parties.”
Even if it doesn’t say you should make amendments in writing you should do this anyway – it’ll help avoid problems later on.
Can a contract be changed by one party?
No. It is not possible for one party to unilaterally change the terms of a contract, since contract law requires that both (or all) parties agree to the terms provided and signed.
If you have an amendment you would like made to a contract, you need to propose this to the other party and seek their approval first.
Before doing this, we recommend ensuring that your amendments are fair, justified, and realistic to increase your chances of receiving their support.
How to amend a contract
The process by which contracts are amended depends on the stage in the contract lifecycle at which you're looking to make the change. It also depends whether you're looking to make a contract amendment via a manual process in Word and email, or by using a contract automation platform.
The contract amendment process in Word
To make a simple, small contract amendment, you could highlight the term you wish to delete or amend and add a comment to the document, before sending it back to the other parties to review and agree to.
However, if you want to make multiple, substantial amendments to a contract, then you may find it more helpful to create a new Word document that lists all the changes to the contract. It’ll need to:
- Show the date, the title and date of the original contract (e.g. “2 March 2021, Amendments to Service Contract dated 18 January 2021”), and the party names and roles
- Describe which sections you’re modifying or deleting and how – reference the paragraph, section, or subsection. You can use strikethrough and italics for deletions or additions
- List any definitions you’re changing
- Describe any clauses you’re adding
You should also include some text making it clear that the amendments only apply to the sections referred to in the new document, and that everything else is still the same.
Finally, you’ll need to make sure everyone who signed the original contract signs and dates this amendment document and gets a copy of it. In Word, this means sending the document via email, to be amended through tracked changes, with versions being created and exchanged until you reach agreement.
The document will then be converted to PDF for signature, after which the new terms agreed will come into effect.
As many lawyers know all too well, this is a slow and extremely manual process, and one that requires switching between different tools to make even the simplest of amendments.
Fortunately, contract automation tools like Juro make amending a contract far easier, reducing the low-value admin work and removing bottlenecks in your contract workflow. Here's how:
How to amend contracts in Juro
Amendment process in Juro: pre-signature
If you want to make changes to a contract before it has been signed by either of the parties, it's really easy to do this in-browser with Juro. For example, you can:
- Make comments in the sidebar, for example if you need to let people know why you’ve edited something
- Tag people – helpful for negotiating, and to make sure someone specific realizes they’re affected by a change
- Use the timeline to compare different versions when amendments are made
And when you make an edit the other side will get an email telling them what you’ve changed, so everyone will know what’s going on.
After this, once any party has already signed the contract, that party's signature must first be revoked before any additional edits can be made.
If you are at this stage in the contract workflow, then you're in luck.
Signatories can revoke their signatures by going to the Parties tab (top grey icon on the right hand side of the contract) and pressing the three dots next to 'Signatories', followed by 'Unsign & edit'.
Also, If a contract has only been approved, and not yet signed by all parties, you can make changes and this will re-send the contract for approval.
Amendment process in Juro: post-signature
But what if a document has been signed by all parties? Well, unfortunately, it will not be possible to Unsign & edit this contract, since contracts signed electronically through Juro are legally binding - as they should be.
Luckily, if you use Juro as your contract automation platform, then a much faster way to suggest contract amendments, even post-signature. All you need to do is simply duplicate the original document from your dashboard and create a new contract with the amendments you’d like to see.
You can use Juro’s editor features to highlight or tag these sections, before sharing them with counterparties. This is far more efficient than re-drafting a contract manually on Word with your desired changes, and then saving and emailing them back and forth where you risk losing version control. When the amended contract has been agreed, just send it for signing as you would normally. Ta-da.
Looking for a way to amend contracts quickly and easily using just one tool? Hit the button below to find out more.