Incorporating an Addendum Into a Contract

By John Cromwell

Incorporating an addendum into a contract requires understanding the terms of the prior contract and current contract law. For the addendum to be binding, the parties must generally understand and agree to all of the terms of the amendment. In addition, the circumstances surrounding the amendment may require the parties to exchange additional promises or assets before the addendum can be incorporated.

Review Existing Contract

Oftentimes, an original contract will specify the circumstances in which it can be amended. The original contract may prevent addendums that would alter specific terms or responsibilities. In some instances, the original contract may grant one party the ability to change the terms of the contract without the other parties having to agree to the amendment. In other situations, the contract may require that any amendment must go through a more rigorous approval process. Consider reviewing the contract with a licensed attorney to make sure you comply with any addendum drafting requirements it sets forth.

Mutual Assent

A valid addendum requires mutual assent. This means all of the important elements of the contract are defined and clearly communicated to all of the parties. If the parties do not agree to or discuss an essential term of the addendum, there is no mutual assent and the addendum cannot be incorporated. When preparing the addendum, consider sending drafts to the other contractual parties. This ensures all matters are addressed, any questions answered, terms are clear and all parties are aware of their new rights and obligations under the amended contract.

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Contractual Parties

All parties to the contract generally must sign the addendum prior to incorporation. The current contract may define who is required to sign an addendum. If it does not, you should consult with the original signatories to the contract and gain their consent, as evidenced by their signatures. If an original signatory is unavailable, consider finding one of his agents. For an agent’s signature to be sufficient, the original signatory must have expressly granted the agent the ability to enter into contracts on his behalf.

Consideration Issues

Sometimes an exchange of consideration between the contracting parties is required for an addendum to be incorporated into a contract. Consideration is some right or asset that has value. Contracts regarding the sale of goods are generally subject to the Uniform Commercial Code. The UCC does not require consideration to be exchanged to incorporate an addendum. Addendums to other types of contracts, however, generally do require the exchange of consideration. What constitutes sufficient consideration varies based on the circumstances of the contract and state law. Consider consulting with a local attorney to determine what consideration, if any, is required for an addendum to be validly incorporated with a contract.

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References

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