Introduction
In Construction Contracts, Parties usually generate Addendums and Amendments to the contract. It is normal due to the ambiguity of information at the very early stages of the project, and definitely, there will be changes as the project progresses. While both terms can refer to changes to the contract, they serve different purposes.
Contract Amendments
Definition
An amendment is an official document (signed and agreed by the parties of the contract) that alters the contract document. It is issued after the contract agreement to accommodate changes throughout project duration. After these changes are made, this amendment is considered as a revision to the contract.
Example
Usually, an amendment is created when one party pinpoints a critical change to the upon agreed contract. This party should draft a letter to explain and propose this change. Generally, an amendment is created to change:
- Time: an extended project duration.
- Cost: increased/decreased budgeted cost for certain items or the whole budget.
- People: Individuals responsible to complete the work.
Contract Addendums
Definition
An Addendum is a formal attachment (signed and agreed by the parties of the contract) that adds or modifies some terms of a previously established contract. It can be issued before contract agreement and is considered part of the original/established contract.
Example
Most often, addendums are supplemental documents added to the end of an existing contract. While they are used to add/modify to the contract, they can also be used to change language of the contract to eliminate any doubt regarding the changes. For example:
- Propose a detailed and concise language to clarify the exact locations of a road and infrastructure project that spans multiple sites within a county.
- Introduce new terms and conditions that are not found in the original contract.
- Attach supplementary documents, such as schedules.
Comparison between Amendments and Addendums
| Points of Comparison | Contract Amendment | Contract Addendum |
|---|---|---|
| Purpose | Amend/Alter specific clauses, provisions, or requirements of the original contract. | Used to supplement the original contract with new details, provisions, or requirements. |
| When to Issue | After Contract Agreement | Before Contract Agreement |
| Who to Issue | Any party that pinpoints a change. The document must be agreed and signed by both parties before issuance | Any party that pinpoints a change. The document must be agreed and signed by both parties before issuance |
| Example | Changes in the Contract Finish Date, Budgeted Cost, or the individuals responsible | Adds new scope of work or new language and clarification to existing clauses |
Conclusion
To effectively modify an existing contract, it’s crucial to understand the difference between an addendum and an amendment. An amendment modifies the fundamental terms of a contract, while an addendum provides additional information without changing the core terms.
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