Contracts are legal agreements between two or more parties that outline the terms and conditions of a business deal or transaction. However, as business circumstances change, it may become necessary to make changes to the original contract. In such a situation, you may need to use addendum or amendment.
Addendum and amendment are two terms that are often used interchangeably, but they have different meanings and implications in the world of contracts. If you’re unclear about the difference between these two terms, read on to find out more.
Addendum
An addendum is an additional document that is added to a contract to modify or clarify certain terms or conditions. It is a separate document attached to the original contract and is usually used to add information that was not originally included in the contract.
Addendum may be used when there is a need to add new terms to the contract or clarify existing terms in a more detailed manner. It is important to note that addendum does not replace the original contract, but rather supplements it.
Amendment
An amendment, on the other hand, is a change made to the existing contract that alters or modifies its terms or conditions. It is a formal written document that is signed by all parties involved in the contract.
An amendment is used when there is a need to change a term or condition that was originally included in the contract. It may also be used when there is a need to delete or remove a term or condition from the contract.
While addendum and amendment are both used to make changes to a contract, the major difference between them is that addendum supplements the original contract, while amendment modifies the original contract.
In summary, addendum and amendment are two different documents used for different purposes. When making a change to a contract, it is important to use the appropriate document based on the type of change being made. Failure to use the appropriate document can lead to confusion and legal issues in the future.