Contract Modification

When negotiating a contract, or after a contract has been signed, you may have reason to want to modify, or change, the contract. In general, contract modifications require the agreement of all parties to the contract. This article will discuss how to modify a contract before it's been signed and after it's been signed.

A contract is legally binding agreement between two or more parties. The average adult encounters contracts many times in the course of his or her life. In many instances, these contracts may be so routine or commonplace you may not even recognize that you are a party to a contract. For example, each time you charge something to a credit card, the sales slip you sign is a contract. In other instances, a contract may be much more formal, involve significant negotiation and require an attorney to review it before it is signed. An example of this type of contract would be the contract you sign when buying a home.

Modifying a Contract before Signing It

To be legally binding, a contract must be agreed to by all interested parties. For example, imagine you want to buy a car, but you don't like the price that's being offered by the dealer. Even if the dealer signs the sales contract, the contract is not valid until you accept it (usually indicated by your signature).

Before entering into a contract, you should carefully read it to ensure that you understand your obligations and the obligations of the other parties to the contract. If you don't understand the contract, or you have questions about the meaning of any sections of the contract, have an attorney review the contract and explain it to you.

Often, contracts may be biased toward one party - often the party responsible for writing the contract. If you didn't write the contract, you should take steps to eliminate these biases. Make a list of changes, or modifications, that you'd like to see, then discuss them with the other parties to the contract. As a result of this negotiation, you may be able to change the contract so the terms, or conditions, are more favorable to you.

Minor modifications to a contract can be handwritten onto the document. Clearly write the changes, and sign your initials next to each change, before signing the entire document. If they agree to the changes, the other party will also initial the changes and sign the document.

For major modifications to a contract, first negotiate those changes with the other parties, then ask the person who originally drafted the document to print a modified version of the contract. All parties should review the reprinted document to ensure that the correct changes were made, and sign the newest version.

Modifying a Contract after Signing It

Once a contract has been signed, then it typically cannot be changed unless all parties to the contract agree to the modifications.

There are many reasons why you might want to modify a contract. Those would include:

  • To extend a contract
  • To change the duration of a contract
  • To change the quantity items that fall under the scope of the contract
  • To add additional items to the contract
  • To change the payment terms of the contract

Some written contracts may spell out how and when modifications can be made. For example, if you have a credit card, you signed a contract when applying for that card. The contract may have said that the credit card issuer could change the interest rate at its discretion. By signing the initial contract, you've already given the credit card issuer the right to make future changes. Or, for example, a sales contract with a vendor might state that all changes have to be agreed to, in writing, by the parties that signed the initial contract. In that case, you can't call the vendor, ask for price reduction, get his verbal approval and assume he'll follow through with the new pricing.

If the contract doesn't address the issue of changes, you'll need to talk to the other parties to the contract, make sure that they agree to the changes, then, to be on the safe side, add a rider (additional section) to the contract that addresses the changes. This rider should be signed by each party to the original contract.

There may be instances where all parties to a contract are unable to come to agreement on changes. If that happens, you'll have to live with the original signed agreement, walk away from the contact (if it hasn't been signed) or calculate how much it will cost to break the contract and decide whether it's worth the cost.

Questions for Your Attorney

If you don't understand the language in a contract, need to better understand the obligations of a contract or need help negotiating a contract, an attorney will be able to assist you.

Among the questions to consider asking your lawyer:

  • Do you have prior experience with contracts similar to this one?
  • Are there sections of the contract that you'd suggest I change?
  • Are there sections of the contract that are biased against me?
  • What are the potential ramifications if we can't modify this contract?
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