What is Contract Amendment?The only constant thing in life is change and contracts are not spared of this as well. Contracts are legally binding documents between two or more parties. It is a document that outlines the benefits and duties that each party should undertake. To be effective legally, some contracts need to be in writing. During the lifecycle of a contract, one or both parties may feel the need to change one or several aspects of the contract. This means that there may be changes to the fundamental entitlements and obligations of a contract.
The changes may mean adding or altering the values of the contract in the entry component of the agreement, on the Special Payment Terms page on the Related Project page. Parties often make changes to their contracts when they are active. This may change on different platforms. Both parties could make changes to these contracts regardless if they agreed upon them orally or in writing. You can amend your contract in part or in whole, and this depends on the needs of the parties. Additionally, you can modify a contract before signing it or after you and the other party have agreed to it.
While there is always a provision for amendments in a contract, one party cannot just wake up one fine morning and make the changes they want. For the changes to be valid, both parties need to agree to them. If one of them does not agree to the changes, then they will not be enforceable. Valid amendments are normally enforced and according to the law, they are legally binding.
Reasons for Contract AmendmentsThere are various reasons why parties to a contract may feel the need to make the changes to their contract. In fact, there are as many reasons for changing parts or whole contracts as for coming up with one in the first place. One for the reasons for changing contracts is to extend them. You find that a contract had been written with a certain time limit in mind. However, due to the good working relationship or factors like the business transaction not ending at the stipulated time, the two parties may decide to make changes to the contract.
Quantity of the items on the contract is an important component of any contract and this should be stipulated very clearly. There are some times when you may need to either increase or reduce the quantity of the items in your contract. Contract amendments are helpful in such situations because all you need to do is notify the other party and they can make the necessary changes to their contract and eventually to the quantity of items. Both parties may agree to change terms of the contract such as the receipt of the product, delivery and its payment as well. In some instances, an amendment may be necessary due to other reasons that are beyond the interest parties. In such instances, a change to the contract may be necessary because of a statutory requirement. A judge may also order the changes to the contract under various circumstances.
When can you amend a Contract?There is no specific time for changing the whole or part of your contract. As long as both parties are in agreement, the process can take off. In the case of minor modifications, the parties can handwrite them and include them in the original document. They can sign or include after handwriting the changes. Things might be different with the main changes because they may need to be re-negotiated and later subjected to more printing and signing. Additionally, if your contract has any particular instructions for modifications you may need to follow those as well.
Tips to Consider when Amending a ContractBefore signing an amended contract, it is important that you note all the provisions that you feel were unfair or biased. If you note them in time, then you can have them changed to a better and more comfortable position for you. You should also make a list of all the amendments that you feel are appropriate for you or your company. This will help in reducing any mistakes that may arise or it can help you not to leave anything out. You should also make a proper representation of the changes as you would like them to appear in your contract.
Also they are obvious features of any contract, most people tend to forget the location, time and date when making amendments to their contracts. It is also important to have foresight of how the changes to the contract are going to affect the rights of the partied that are signing the contract. If any rights are violated, it may lead to a legal problem that may have the two parties in court for a long time. That is quite unnecessary as it could destroy an otherwise thriving business relationship.
Contract Amendments before Signing a ContractSome people may include changes to a contract before its signing and in such instances; you can make the changes by hand. A change may also be in the form of correcting a typo among other modifications. In such cases, both parties will put their initials to the changes.
Contract Amendments after signing a contractUnlike before signing a contract, it can be difficult amending a contract after the two parties have signed it. A reason for this is that the parties to the agreement may have already started implementing the duties assigned to each of them in the requirements of the contract. In case you want to make any changes after signing, you should check to see if any of the parties have started performing their contractual assignments. A good example comes when any of the parties has delivered the product, in such cases, you should note the delivery.
You should also have in mind the manner in which the amendments will affect the duties that have been performed. It may be more difficult to amend the contract after signing because there might be need for further negotiations. You should be able to present you case for negotiations logically and convincingly. The changes should also satisfy all the laws pertaining to contract laws. Such laws include laws related to fraud. Ensure that all the amendments you have included are in writing
When Amendments are not allowedIn some instances, parties to a contract may use language that may not allow any changes to be made to the document at a future date. In such cases, the parties of one of the parties may refuse to sign to the amendments. Consequently, the parties will have to implement the contract as long as there are not illegal or unfair.
Is a Lawyer Necessary for the Contract Amendments?Before you make any amendments to the contract, you may need to show the lawyers what you intend to change and get their opinion about the changes. People who have major changes in the pipeline or have amendments under negotiations will especially need the help of their lawyers to implement the changes. Experienced contract attorneys can be helpful in drafting and reviewing the modifications to ensure they meet your needs as you desire.
Extensive ChangesSome contracts need extensive changes and in such cases it s better to rewrite the agreement that entails all the other agreement. A contract at can include a clause that says that it supersedes replaces ant contract between the two parties. All the amendments and changes to the contract including any appendix or exhibit are enforceable but only if they are in writing and bear the signatures of the representatives of both parties.
Amendments, Consent and WaiversIn some cases the parties may want deviate from the contract but there may not be a need for any changes. A good example is a person allowing the other party to a contract to disclose some information regardless of the fat that their original contract forbids them to disclose the information. On some instances, when a party waives a particular provision or allows a part that the contract has otherwise refused, they are considered to be amendments. In other situations they are aptly named as consents or waivers. The latter and the formers should be in writing as well.
How to create an Amendment to a contract?When creating an amendment to a contract, you should be as concise and as specific as possible. The document can be informal such as a letter of agreement or it can look like the original contract in layout and in font and amendment can come in the form of many different styles.
Styles of creating Amendments in ContractsThe first of these is the Strikethroughs and redlines. With this method, you will be able to see all the deletions and additions as the additions will have underlines and deleted texts will be crossed out. There will always be a statement that describes the process that was used in the drafting of the amendment and that precedes its implementation.
Replacing an Entire ClauseThis method provides that you replace the whole clause with the new one and state that you there was a replacement.
Describing the AmendmentYou can describe the changes with this method of amendment. Although this is normally shorter, it requires for the parties to look at the existing contract as well.
You are at liberty to choose the method that is most favorable to you or combine all of them. Both parties should only ensure that they have good intentions towards both parties as well as to other third parties that will read the contract. You should also be able to alter any cross-references in case there is a need to do so.
Contract Management Software for AmendmentsThe easiest way to make changes to your contract online is through Contract management software. The latter helps with the stages involved in the creation of contracts. It also helps to track all the changes to a contract during its whole lifecycle. Amendments to a contract are includes among the changes. Not only will the software help you make the changes, they will also help you keep track of them.
Some software have features that will allow you to manipulate contracts and upload renewal templates to your database in real time. With such software, you will not need to start from scratch as you only need to attach the updated sections to the existing contract. A version control number is then assigned to your transaction. You can add more team members while updating legal departments at the same time. Daily workflows are also made easier with the contract amendment and renewal phase.
Keeping Track of Amendments in RenewalsIn the businesses world, if you do not meet a deadline you get a penalty especially if you fail to meet the set terms and conditions. You will not have to suffer with all these if you have good contract management software that will alert you when you have to renew your contract. Software make everything easier because they track amendments on the renewals and on the main document. The amendments are also tracked and kept in a centralized portal with the same process of approval as the first contract.
Some businesses transactions will call for keeping track of the renewals, amendments as well as associated audit trails. If you do all these manually, you will lose many hours as you turn file servers upside down, check e-mails thoroughly and scatter notebooks everywhere. Not having a proper system of piecing together the workflow of your contracts can make your company lose sight of its contacts and attract heavy penalties. Contract management Software will make everything easier for you with its tracking abilities especially for renewals.
Retrieving and Editing AmendmentsContract management software can allow you to create a fresh amendment or retrieve an existing but pending modifications for additional editing. You can do this using some features on the software. In amendment processing, you can make edits and these include activating all the pending contract lines, changing the amounts on the active contract lines and cancelling active contract lines. You can change the negotiated amount on the contract as well. You can make any of the above changes as long as the amendment is still in its pending status.
It is also possible to save the contract amendments in different amendment tables and assign them different numbers. It will update the amount fields whenever you make any changes to the amended amount.
Big companies often deal with large volumes of contracts which means they may have to deal with different contracts that require amendments. The best ting about contract management systems is that they can allow the processing of an individual contract or a person can process several amendments at the same time. This is definitely a time saver for people who may need to implement the contracts as soon as possible.
Some Rules to apply when processing amendments with Contract Management SoftwareWhen contract lines have associated billing plans that are in progress, you cannot amend or cancel the contract line until the billing plan is completed. When contract lines have associated revenue plans in progress, you cannot cancel or amend contract lines. When contract lines have associated billing plans in progress and associated revenue plans that are also in progress, you cannot cancel or amend the contract lines as well until the billing plans get completed. On the other hand, when contract lines have an associated billing plans that are not yet in progress or are already completed and revenue plans that are in progress, you can amend or cancel the contract lines.
How to choose an appropriate contract management system for amendmentsThere are very many contract management solutions in the market tailored in different ways but all geared towards making the whole process of contract management easier. You can achieve controllable and automated contract management with purpose-built contract management solutions. There are very many solutions in the market today that can confuse a novice buyer. The goal is to get a solution that will meet all your needs.
The first step to choosing a good vendor in relation to contract management system is sitting down and coming up with a list of expectations for your solution. As you make the list of all your expectations, you should also have in mind the new solution and other business processes of the organization. Such processes include Human resources management, Procurement and so on. It is also advisable to choose a reliable supplier. You do not want to buy from a vendor who is in the market today but missing the next day. If they are reliable it means that you can get help whenever you need and in case of updates, you will be able to get it.
Requirements from a Contract management Solution for contractual amendmentsWhen you want to choose a contract management system for your amendments, You can choose the simplified method or the consistent method. The former method is where you will only give the client generic expectations for your contract management solution. This method will see the client give their supplier a simplified/standard list of their expectations.
Among the requirements found in the simplified method is that the solution should make it easier and quicker for you to get the document you need. You should also have full access to all the information that you need. There should also be safe and structured completion of the information. The version of the documents should also be up-to-date. Most company owners will ask for remote access to their contracts as well. The solution should also be able to generate reports on the contracts. There should also be improved compliance with the contractual provisions.
Most processes in companies are slowed down by lack of efficiency. It is only natural that most companies will be on the lookout for a solution that promised them higher efficiency in their organisation. A good solution should also offer simplified cooperation. In most cases, people will be looking for quick and transparent electronic approval process for their organisation. The above requirements for contract management systems work well for most organisations. There are however, times when a client may face much abstraction with the method that could leave room for interpretation. This, therefore, means that you may end up with a solution that will not work for you.
If the simplified method does not work for you then you can choose the consistent method below.
The Consistent MethodThe consistent method entails setting up of requirements for your contract management system. This will require more effort, time and in-depth analysis of your needs to get the desired results. The method is consistent because you should list the functional requirements of the system based on the goals to be achieved at various stages of your contract lifecycle.
In the contract initiation and drafting stage there should be a library of customized template for your contracts. You should also have a card that describes the contract to all the needs of your enterprise. There should be automatic completion of the standard fields in your contract. It should also include all the tasks that are related to the drafting of your contracts.
In the contract negotiation process you should look at the tasks concerning negotiation, its adjustments, monitoring, recording and revision processes. When selecting a contract management solution you should also consider the matter of adjusting the automated process and not only the automation process. For the approval or signing process you should also look at successive or parallel approval of contracts.
Also ensure to look into e-signatures, signatures to other counter-parties, making comments when approving, signing and rejecting and report on stamping /approval signing actions. There should also be compliance with the contractual provisions. The contract management software should be able to ensure that there are set targets for your contract compliance. You should also be able to monitor the entire course of contract compliance for your company. There should also be automatic reminders for contract compliance.
You should also be able to get audit of reports and contracts reports as well. If your system is able to generate reports you will be able to know the length of time it will take to create and negotiate contracts, the person to approve the contracts, the number of contracts drafted and signed and the number of contracts under each person or department.