An addendum is an addition to an existing contract that changes the terms and conditions of the original agreement. The main function of an addendum is to modify, nullify or clarify parts of the original document. Addendums are generally used along with contracts.
Read on to find out more.
What is an addendum?
An addendum is used to update the terms and clauses contained in a contract originally. Essentially, it is an attachment to a contract. It helps modify and update the terms and conditions of the contract. It can be something as easy as extending contract dates to much more complex aspects such as restructuring the deliverables schedule or payment methods.
Every addendum must be signed and approved by all the parties involved in the contract. Once all the signatories have signed, it shows that all the parties involved in the contract have read and agreed to the addendum. It also needs a witness to verify that all parties have agreed to the changes.
How does an addendum work?
An addendum is also a document in writing and may contain additions to the original contract. This supplemental document may even change the initial agreement that makes up the original contract or add more information in nature. It may be created to simply explain parts of the original contract or to demonstrate a portion of the agreement. As such, an addendum may also contain drawings and illustrations that explain or verify the agreement.
What’s the difference between addendum and amendment?
An addendum is a document that changes the terms of an original agreement. Once the change is made, it is called an amendment. Both addendums and amendments deal with changes that are made to an existing agreement. But they have one major difference between them.
An addendum is added to an agreement or contract relating to work that is currently going on or parts of projects or contracts that have not started yet. On the other hand, an amendment is made to a contract that is already complete. That is, the original contract is completed and all the parties to it have acknowledged its completion.
Amendments can be commonly found in construction contracts. They help in making alterations to a contract without having to redo the entire document. For example, if the construction of a building has started and the construction team hits a roadblock during the foundation excavation, an addendum can be made to include the requirements for this excavation in the contract without having to redraft the entire document just to include this part.
Various types
There are various types of addendums depending on the type of original document it is being added to. Say, for example, if the original document is a will and you don’t want to rewrite the entire document but want to alter only a few points contained in it, you can make an addendum to your will. In this addendum, you can add to the heir list, change the heirs, alter the proportion in which the inheritance should be divided among the heirs, etc.
Or if the original contract is an insurance policy, an addendum added to it could alter the coverage or the factors that are included in the policy coverage. An insurance addendum could talk about a change in the insurance premiums as well. Insurance policies usually have a lot of addendums. This is mainly because while the policies themselves are standard, the terms and features may not suit every policy buyer. So, addendums are created and attached to suit the needs and requirements of the individual policyholders.
If you want to alter the terms and conditions of a lease, rental or purchase agreement, you will have to create a real estate addendum. This will allow you to introduce fresh terms or delete existing ones. You can also change the price of the property, the terms under which it will be sold or other factors that have a bearing on the sale of the property.
Related FAQS
1. What Is a Gap Addendum?
GAP (Guaranteed Asset Protection) is a statement that helps to change an existing insurance policy or financing agreement. This is usually seen in automobile insurance policies. It helps to bridge the gap between the amount covered by the policy and the cost of the vehicle being damaged or stolen.
2. What Is a Law School Addendum?
A law school addendum is a document that you can provide if you’re in law school along with your application to highlight any other achievements that you would like the school to notice. This can include your academic records, work experience, etc.
3. What Is a Lease Addendum?
A law school addendum is a document that you can provide if you’re in law school along with your application to highlight any other achievements that you would like the school to notice. This can include your academic records, work experience, etc.
4. What Is a Pet Addendum?
A pet addendum is a change in the lease agreement in case the lessee wants to have a pet on the premises. The change can be made only with the agreement of the lessor. The changes can be made to include permission to keep the pet on the premises, that the premises must be maintained well, that any damages caused by the pet must be made right by the lessee, etc.
