What is an Addendum to a Contract?
An addendum to a contract is an attachment to a legally binding business document that alters the original contract. It is a chance for both parties to make amendments they deem necessary, without having to amend the entire contract. Once both parties have signed an addendum, it is legally binding and should be considered part of the original contract. It is common for many different addenda to be added to one contract .
Addenda are simple and effective solutions in any business transaction that will save time and money, rather than having to draw up new contracts for contracting parties to sign again. While the most commonly used type of addendum is called an employment addendum and is used at business transactions between employees and their employers, addenda can also be used in any other legal agreements.
Why Use Contract Addendum in Word?
Consideration for Addendum to Contract Templates in Microsoft Word
Using a Microsoft Word template to create an addendum for a contract is an efficient way to save time and ensure consistency in your documents. A Microsoft Word template can be used to create custom addendums that may be specific to a sub-product, or to create a standard addendum when needed.
Using a Microsoft Word template, expectations can be easily set for content and style. It is also easy to ensure that multiple custom addendums are produced in the same format with a template. The finished custom addendum templates should be saved along with the original addendum template for easy access, and can be copied or converted into PDF (and/or Word) format when needed, or shared through SharePoint.
Contract Addendum Essentials
Every contract addendum must include the date, the parties to the contract, a reference to the original contract including date of the contract, and precise amendments to the contract. It is not enough to simply state that the contract is referred to in the addendum, the addendum must state the actual date of the contract. The language below is an example of the requisite components of an addendum: This Addendum dated this _____day of _____, 20__. By and between ________________ (Landlord) and ___________________ (Tenant). Reference is made to a certain lease dated the ____ day of ______________, 20__, (the "Lease") by and between _____________, Landlord and _____________, Tenant covering the following described property: ____________________________________________________________ (the "Leased Premises"). It is the purpose and intent of this Addendum to the Lease to set out additional terms agreed to by the parties as follows: 1. Language to supplement the original lease must be added here. 2. Language to supplement the original lease must be added here. Except as specifically set forth above, all other terms and conditions of the Lease shall remain in full force and effect. At no time shall this Addendum serve as any waiver or amendment of the Lease without express agreement in writing from both parties. Tenant: ___________________ Landlord: ___________________
How to Make an Addendum in Word
Creating an addendum in Microsoft Word is a streamlined process, especially with the availability of contract templates. To begin, open a blank document in Microsoft Word and navigate to the "Insert" tab in the ribbon at the top of the window. From the dropdown menu, choose the "Page Number" option and select where you would like the page number to appear on your addendum. This could be in the header or footer, or even in the middle of the page.
Next, it is important to have a title that clearly states the purpose of the addendum. For example, "Addendum One to Settlement Agreement." Adjust the font type and size as necessary by clicking on the "Home" tab and using the font options available. If you wish to introduce the addendum before the title, use the "Insert" tab to add a text box, and then write an introductory statement.
After you have positioned the page number and added an introduction and title, begin entering the body of the addendum. Using a template can simplify this process as many templates have been pre-formatted with the relevant sections and headings. For a basic contract addendum template, the following sections are usually included:
- Parties: Introduce the parties to the contract. This can be a simple "The parties to this addendum are …."
- Introduction: Comparatively brief, this section contains the purpose of the addendum. An example of wording would be "The parties to this addendum …"
- Recitals: This section provides the groundwork for the addendum, briefly explaining why it is necessary. It usually details any vital facts about the original contract before outlining the addendum’s provisions.
- Provisions: This is where all the important changes to the original contract are made, such as new clauses.
- Amendment: This gives details on how the original contract should be amended or modified. An example would be "The parties agree that …"
- Severability: This section protects the overall validity of the contract by clearly stating that if some parts of the agreement are invalid, the other sections are still in effect.
- Governing Law: This section states which jurisdication applies to the contract. This can be a country, state, or county.
- Signatures: Sign and date the document at the end, usually along with any witnesses to the agreement.
Save your work periodically by clicking "Ctrl +S"or choosing "Save" from the file menu. Finally, print and sign the addendum so that the updates you’ve made to the original contract take immediate effect.
Legal Considerations for Addendum Templates
Governing Laws
When it comes to using a sample addendum template, the most important legal consideration is whether the addendum is governed by federal, state or local laws, and whether the laws of the resident locations of the parties affect the validity of the contract or agreement formed by the amended template. Relatedly, you must ensure that the addendum template is compliant with the applicable laws to which the addendum is subject.
Incidental and Prohibited Terms
As for any other form of contract, an addendum must not contain any terms or conditions which may be prohibited or otherwise forbidden by predicate laws. If any terms or conditions do violate predicate laws , those specific contract terms will be considered null and void, but the remaining terms of the addendum will remain valid and enforceable.
Legal Disclaimer
Using a sample addendum template does not guarantee a valid or enforceable contract. A template is a sample and should be modified according to the circumstances of the contractual relationship the template is expected to govern. The modification of any addendum template must comply with all applicable laws governing the formation, interpretation, validity and/or enforceability of contracts, If the terms of the addendum have not been properly modified to incorporate all provisions required by predicate laws, the resulting addendum may not be valid or enforceable.
Common Addenda
Extensions of Time Addenda:
These types of addenda are often used in construction contracts that incorporate a schedule of performance into the contract. Construction projects are subject to delays due to numerous unforeseen circumstances, including adverse weather conditions, design defects and change orders requiring additional work, and delays by subcontractors. Most construction contracts will state that the construction is to be completed within a certain period of time from the date of notice to proceed, but will also provide that such completion period is extendable by additional time under certain circumstances. Construction contracts will also state the amount of time which the contractor can be granted for such extensions, depending upon the reason for the delay. Generally, delays caused by events beyond the contractor’s control will entitle the contractor to additional time, and the owner’s failure to make timely progress payments or review plans, or failure to give timely notice of disapproval, will frequently result in the contractor being entitled to as much time as is necessary to complete the project.
Sometimes construction contracts will not state the number of days to which a contractor will be entitled for an extension, but rather will state that the number of days for an extension will be computed by some formula. Likewise, sometimes the contract will provide that the amount of time for contract performance will be extended by the same number of days as the number of days of delay caused by a specific event plus an additional number of days. These types of extensions typically require careful interpretation in order to determine the actual number of days to which the contractor is entitled.
Changes to Payment Terms Addenda:
One of the most common reasons for execution of an addendum to a contract is to change the payment terms under the contract. Often times the parties will orally agree to change the payment terms, but fail to execute a written agreement to put the change in writing. Changing the date that payments are due, or changing the amount of the payment or the timing of payments often requires an addendum to the contract under both construction contracts and contracts for the sale of real estate.
Exceptions and Provisos Addenda:
Many contracts will provide that certain reports need to be furnished in order for the contract to be enforceable. For example, if the parties enter into a commercial lease, depending upon the type of use to which the premises will be put, the lease may require that the tenant furnish a phase I environmental assessment stating that the property is free of hazardous substances. If certain exceptions or provisos to the contract are required, such as the contract is conditioned upon the approval of a variance or a final plat, the party relying upon the exception or proviso should execute an addendum acknowledging that such exception or proviso is acceptable to that party.
Downloadable and Editable Addendum Templates
There are a couple of authoritative sites where a person can download addendum templates. Some sites require that a user sign up for a free membership to obtain the templates. However, the documentation obtained will be pristine. Additionally, there are many informal locations on the Internet that offer addendum templates. Unfortunately, these are typically hosted by sites that do not specify the credentials of their authors.
Reliable sites for obtaining addendum templates include the following: These types of sites are not hard to find, and one can conduct a search on Google to find reliable sites that offer these documents for free or at a nominal price. There are other sites that offer both free and premium documents, but this depends on the contractual addendum needed. When a person accesses the contract addendum template, they need to download it into Microsoft Word. For those who do not have Word, there are online word processors such as Google Docs. They can quickly change whatever is in the document to suit their needs. It works best to start from a point that is as accurate as possible, rather than trying to revise basic contract language. Suppose a person wanted a purchase agreement addendum template. They can download and edit the document with information on the purchase and any other appropriate details. Typically, they can follow the existing format, and describe the addendum and its purpose in detail to meaningful completion before printing it.
Contract Addendum FAQs
The following are some common questions regarding the use of contract addendums:
Is an addendum the same thing as an amendment?
An addendum may amend a contract in the sense that it makes some alteration to a contract. However, an amendment usually refers to a situation where there is a change in the terms. An addendum, on the other hand, may not change the terms of the contract but can attach new documents as exhibits to the original contract.
Is a contract addendum binding?
Yes, because it is an official written attachment to the contract . Likewise, the addendum is legally binding towards all parties under the original contract. In addition, the addendum must be signed by all parties under the contract to be legally binding.
When is it recommended to use an addendum instead of a verbal modification or an amendment?
If the parties want to be fully legally protected, it is best to put any changes in writing by an addendum. In addition, if it’s an addendum that attaches documents to the contract, the parties should definitely use an addendum rather than a verbal modification or an amendment.